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A  SHORT  ACCOUNT  OF 

ENGLAND'S  FOREIGN  TRADE 

IN  THE  NINETEENTH  CENTURY 
ITS  ECONOMIC  AND   SOCIAL   RESULTS 


ARTHUR   L.   BOWLEY,   M.A. 

Cobden  Prizeman  {Cambridge),  iSgs ; 
Formerly  Scholar  of  Trinity  College,  Cambridge. 


WITH   TEN   STATISTICAL   DIAGRAMS 
REVISED  EDITION 


Here  shall  you  trace  in  flowing  operation, 
In  every  state  of  practical  busy  movement, 
The  rills  of  civilisation." 

—Walt  Whitman. 


LONDON 
SWAN     SONNENSCHEIN    &    CO.,    LIM. 

NEW  YORK:   CHARLES  SCRIBNER'S  SONS 
1905 


^^^  ^^^p^ 


FIRST  EDITION,  October,  1893. 
SECOND  EDITION,  June,  1905. 


PREFACE 


K 


The  subject  set  for  the  essay  for  the  Cobden  Prize 
awarded  at  Cambridge  University  in  December, 
1892,  was  *'  Changes  in  the  Volume,  Character,  and 
Geographical  Distribution  of  England's  Foreign  Trade 
in  the  Nineteenth  Century,  and  their  Causes."  The 
essay  which  was  then  successful  was  not  published 
at  once,  but  has  been  re-cast  and  completed,  while 
additions  and  changes  have  been  made  to  bring  it 
within  the  scope  of  the  "Social  Science  Series." 

As  it  now  stands,  it  does  not  profess  to  be  a  com- 
plete account  of  our  recent  foreign  trade — that  being 
of  course  impossible  in  a  book  of  this  size,  where  the 
subject  of  each  chapter  would  easily  fill  a  volume  by 
itself;  but  an  endeavour  has  been  made  to  point  out 
and  give  the  right  prominence  to  the  more  important 
of  the  events  and  causes  that  have  affected  the 
growth  of  trade,  to  touch  on  the  more  obvious  of 
the  social  effects  of  this  growth,  and  more  especially 
to  furnish  an  introductory  text-book,  which  will 
supply  the  fundamental  facts  of  this  century's 
commerce  in  an  easily  accessible  form. 

Tables   of    figures   have   been   as  far  as   possible 


lU 


PREFACE. 


avoided,  since  they  are  liable  merely  to  weary  the 
reader  without  affording  him  any  real  information, 
but  their  place  is  supplied  by  diagrams,  on  the  use 
of  which  it  is  desired  to  lay  special  stress.  By  these 
it  is  possible  to  present  at  a  glance  all  the  facts  which 
could  be  obtained  from  figures  as  to  the  increase, 
fluctuations,  and  relative  importance  of  prices,  quanti- 
ties, and  values  of  different  classes  of  goods  and  trade 
with  various  countries  ;  while  the  sharp  irregularities 
of  the  curves  give  emphasis  to  the  disturbing  causes 
which  produce  any  striking  change.  In  many  cases, 
perhaps,  more  can  be  learnt  by  considering  and 
accounting  for  all  the  features  of  a  diagram  than 
in  any  other  way,  so  that  the  text  of  this  book 
may  to  some  extent  be  regarded  as  an  explanation 
and  interpretation  of  the  plates.  Great  care  has 
been  taken  to  ensure  the  accuracy  of  these ;  they 
are  substantially  the  same  as  those  sent  with  the 
original  essay  to  the  Vice-Chancellor,  but  have  all 
been  redrawn  and  verified. 

A.  L.  B. 
Bristol, 
Bfh  September,  1893. 


NOTE  TO  REVISED  EDITION,  1905. 


In  this  edition  the  tables  and  diagrams  have  been 
continued  to  1903,  and  errors  and  misprints  have 
been  corrected  throughout.  As  the  original  edition 
was  stereotyped,  it  has  not  been  possible  to  intro- 
duce any  alteration  of  treatment  or  arrangement, 
and  the  book  is  still  substantially  that  published 
in  1894.  It  should  be  understood  that  the  author 
does  not  feel  bound  to  support  every  opinion  he 
advanced  at  that  date,  in  some  cases  on  subjects 
to  which  he  has  given  no  further  attention.  It  is 
hoped,  however,  that  the  great  part  of  the  book 
depends  on  facts,  not  on  opinions,  and  that,  with 
the  few  amendments  that  friendly  criticism  has 
shown  to  be  necessary,  these  are  correctly  stated. 
Since  the  first  edition,  the  policy  of  Free  Trade 
has  been  attacked,  and  all  tariff  questions  have 
become  controversial ;  statements  which  were  com- 
monplace in  1893  will  in  1905  appear  to  be  dogmatic. 
It  seemed  impossible  to  alter  the  treatment  of  this 
subject  without  embarking  on  a  long  historical  and 
controversial  analysis,  and  therefore  the  paragraphs 
relating  to  Free  Trade  and  Imperial  relations  have 


NOTE  TO  REVISED  EDITION. 


been  left  untouched.  It  is  perhaps  important  to 
notice  that  in  a  book  emanating  from  Cambridge 
ten  years  ago,  many  of  the  arguments  recently 
brought  forward  by  tariff  reformers  were,  however 
lightly,  indicated  and  summarised.  (See  pp.  15,  16, 
41-46,  123-4.)  The  arguments  that  filled  the  news- 
papers in  1903-04,  whether  correct  or  not,  were,  at 
any  rate,  not  new  to  the  student  of  economics  or 
history.  Again,  it  did  not  seem  desirable  to  rewrite 
the  last  chapter,  as  would  have  been  necessary  to  give 
a  picture  of  the  position  of  our  industries  in  relation 
to  foreign  competition  at  the  present  date;  for  that 
would  have  involved  questions  of  too  complex  a 
nature  to  have  a  place  in  a  book  which  is  mainly 
historical,  and  intended  to  be  introductory  and  ele- 
mentary ;  and,  at  the  same  time,  the  original  slight 
sketch  showing  how  the  problems,  which  have  since 
become  more  acute,  appeared  ten  years  ago,  may 
have  some  permanent  value.  For  these  reasons, 
such  alterations  and  additions  as  were  necessary 
have  been  relegated  to  notes  in  an  Appendix,  and 
the  main  part  of  the  book  is  left  with  its  original 
imperfections  unaltered. 

A.  L.  B. 
Reading, 
Maxj^  1905. 


CONTENTS 


PAGE 

List  of  Dates  .  .  .  .  .         ix,  x 

I.— INTRODUCTORY. 

1.  England's  Commercial  Condition  internally     .  .  i 

2.  England's  Commercial  Relations  abroad         .  .  8 

3.  Division  of  Labour        .  .  .  .  .11 

4.  Index  Numbers  .....         17 


II.— THE  FRENCH  WARS,  1793-1815. 

1.  The  Expense  of  the  War,  and  Hindrances  to  Trade 

2.  Permanent  Effects  of  the  War  on  Commerce  . 

3.  The  Industrial  Revolution 

III.— THE  BATTLE  OVER  FREE  TRADE,  1815 

1.  Introductory        ..... 

2.  Principles  and  History  of  Free  Trade  . 

3.  England's  Adoption  of  Free  Trade 

4.  The  Immediate  Effects  of  Free  Trade  . 

IV.— SUCCESS  OF  FREE  TRADE,  1850-1870. 


23 

29 

32 


1850. 


39 
41 
47 
51 


1.  Unlimited  Expansion      .  .  .  .  '55 

2.  Treaties  with  Foreign  Countries  .  .  .61 

3.  American  War  and  its  Effects — Trade  with  U.S.A. 

and  India  ......        64 

4.  Balance  of  Imports  and  Exports  :  England's  Foreign 

Investments  .  .  .  »  *        T5 

vii 


CONTENT^. 


v.— TRADE  IN  THE  PERIOD,   1870-1892. 


PACE 


1.  The  Crises  of  1873  and  1883,  and  their  Causes  .         80 

2.  Railways,  Transport,  and  Freights      ...         86 

3.  Silver  and  its  History  (1870- 1 893)         .  .  .96 

4.  The  Steady  Increase  of  the  Volume  of  Imports  and 

Exports      ......       102 

VI.— ENGLAND'S  PRESENT  POSITION. 

1.  The  Position  of  England's  Great  Trades         .  .       108 

2.  Exports  and  Foreign  Competition        .  .  .120 

3.  Imports  and  Agriculture  ....       133 

4.  Conclusion  ......       141 

APPENDIX  to  REVISED  EDITION  .  .       148 


INDEX  TO  DIAGRAMS. 


1.  Giving  general  view  of  total  Foreign  Trade  and  proportion  per 

head  of  population  ;  and  the  same  reduced  by  index  numbers        Frontispiece 

2.  Showing  fluctuations  of  Imports  and  Exports,  1793-1818  -  -    facing  page  26 

3.  Showing  fluctuations  of  the  price  of  Wheat,  1793-1818      -  -  ,,  28 

4.  Showing  expansion  of  Trade  (Imports  and  Exports),  1S30-1873   -  ,,  56 

5.  Showing  excess  of  Imports  over  Exports,  1855-1 891  ■  -  >>  73 

6.  Showing  the  Depressions  of  Trade,  1870-1892,  illustrated  by  the 

Shipping  statistics,  and  interpreted  by  index  numbers  -  -  ,,  80 

7.  Showing  the  character  of  Exports,  1849-1903,  and  distinguishing 

Textiles  and  Minerals       -  -  -  -  -  -  ,,108 

8.  Showing  distribution  of  Exports  (quinquennial  averages,  1849- 

1902) ;    distinguishing    British    Possessions,    United    States, 

India,  Australia,  Germany,  France,  and  Russia        -  -  ,,  122 

9.  Showing  the  character  of  Imports,  1854-1903,  and  distinguishing 

food,  and  raw  materials  for  textile  manufactures  -  -  ,,  133 

10.  Showing  the  sources  of  Imports  (quinquennial  averages,  1854- 
1902) ;  distinguishing  British  Possessions,  United  States, 
India,  Australia,  Germany,  and  France  -  -  •  i>  i3S 


PRINCIPAL  DATES  CONNECTED  WITH 
ENGLAND'S  FOREIGN  TRADE. 


Declaration  of  War  with  France,  1793. 

Spinning  Jenny  in  use,  1798. 

Union  of  Great  Britain  and  Ireland,  1800. 

Cartwright's  Loom  in  use,  1801. 

Peace  of  Amiens,  1802. 

Berlin  Decrees,  and  Orders  in  Council,  1807. 

War  with  America,  1812-15. 

Waterloo,  181 5. 

Resumption  of  Cash  Payments,  1819. 

Petition  of  Merchants,  1820. 

Commercial  Crisis,  1825. 

Settlement  in  West  Australia,  1829. 

First  English  Railway,  1830. 

First  American  Railway,  1832. 

East  India  Company's  Charter  repealed,  1833. 

Settlement  in  South  Australia,  1834. 

Commercial  Crisis,  1836. 

Wheatstone's  Telegraph,  1837. 

First  Ocean  Steamer,  1838. 

Commercial  Crisis,  1839. 

Penny  Post  established,  1840. 

Settlement  in  New  Zealand,  1840. 

Hume's  Tariff  Committee,  1840. 

Ceding  of  Hong-Kong,  1841. 

Paris  and  Rouen  Railway,  1842. 

Peel's  Fiscal  Reforms,  1842. 

1845- 
Irish  Potato  Famine,  1845. 
Repeal  of  Corn  Laws,  1846. 
Gold  Discovery  in  California,  1847. 
Commerical  Crisis,  1847. 
Navigation  Laws  repealed,  1849. 
International  Exhibition,  185 1. 
First  Submarine  Telegraph,  185 1. 
Gold  Discovery  in  Australia,  1851. 

ix 


PRINCIPAL  DATES. 


Gladstone's  Fiscal  Reforms^  1852. 

Crimean  War,  1854-56. 

Bessemer's  Steel  Patent,  1856. 

War  with  China,  1856. 

Indian  Mutiny,  1857. 

Commercial  Crisis,  1857. 

Commercial  Treaty  with  France,  i860. 

American  Civil  War,  1861-65. 

Reduction  of  Prussian  Duties,  1862. 

Austro- German  War,  1866. 

Commercial  Crisis,  1866. 

Suez  Canal,  1869. 

Franco- Prussian  War,  1870-71. 

Commencement  of  Fall  of  Rupee,  1872. 

Demonetisation  of  Silver  by  the  Latin  Union,  1874. 

Heavy  Commercial  Failures,  1875. 

Russo-Turkish  War,  \^T]-']Z. 

German  Tariff  increased,  1879  and  1885. 

Russian  Tariff  increased,  1881,  1882,  1884-5,  and  1890. 

Austro-Hungarian  Tariff  increased,  1882. 

Transvaal  Gold  Discoveries,  1885. 

Great  Trade  Depression,  1886. 

Sherman  Silver  Act,  1890. 

McKinley  Tariff,  1890. 

Commercial  Crisis,  1890. 

Reduction  of  many  European  Tariffs,  but  increase  of  French, 

1891-2. 
Australian  and  American  Bank  Failures,  1893. 
Sherman  Act  repealed,  1893. 
Indian  Mint  closed  to  Silver,  1893. 
Wilson  Tariff,  reducing  U.S.A.  Duties,  1894. 
Dingley  Tariff,  increasing  U.S.A.  Duties,  1897. 
Canada's  Preferential  Tariff,  1898. 
South  African  War,  1899- 1902. 
Commonwealth  of  Australia  inaugurated,  1901. 
Sugar  Duty  imposed  in  United  Kingdom,  1901. 
Brussels  Sugar  Convention,  1902. 
Corn  Duty  in  United  Kingdom,  1902-3. 
Cape  Colony's  Preferential  Tariff,  1903. 

[For  more  detail,  see  Board  of  Trade  Memorandum,  Ed.  1761,  pp.  5-9.] 


ENGLAND'S  FOREIGN  TRADE  IN 
THE  NINETEENTH  CENTURY 


I— INTRODUCTORY. 

1.   ENGLAND'S  COMMERCIAL  CONDITION  INTERNALLY. 

The  history  of  foreign  trade  is  inextricably  bound  up\ 
with  the  ^^eneral  history  of  the  development  of  civilis-  | 
ation  in  the  nineteenth  century  ;  without  foreign  trade  \ 
this  development  could  not  have  taken  place,  while 
progress  in  all  directions  has  in  turn  reacted  on  the 
growth  of  trade. 

The  beginning  of  this  progress  in  knowledge,  power  : 
and  intercourse  may  be  traced  back  to  the  inventions  • 
of  the  spinning-jenny,  the  steam-engine,  and  other  j 
mechanical  appliances,  which  took  place  in  the  latter  : 
half  of  the  eighteenth  century.  These  inventions  - 
produced  manufactures ;  manufactures  needed  and  j 
found  purchasers,  not  only  at  home,  but  in  the  colonies, 
America,  and  the  Continent ;  increased  and  profitable 
exchange  gave  renewed  stimulus  to  science,  which 


ENGLAND'S  FOREIGN  TRADE  IN 


continually  gave  birth  to  new  inventions,  not  only  in 
manufacture,  but  in  every  branch  of  human  labour ; 
machinery  superseded  hand-labour,  the  quantity  pro- 
duced by  the  same  amount  of  work,  differently  applied, 
was  indefinitely  increased  ;  labour  was  spared  from 
agriculture,  and  used  in  the  manufactures  and  arts, 
placing  within  everyone's  reach  things  hitherto  costly 

;  or  unknown,  and  adding  to  the  comfort  and  luxury  of 

I  common  life  in  a  way  which  we,  who  regard  the  cheap 
possession  of  the  most  finished  products  of  the  most 
complicated  machinery  as  a  matter  of  course,  cannot 
well  realise. 

Meanwhile  manufacture  at  home  was  found  so  pro- 
fitable that  England  ceased  to  provide  her  own  food, 
but  in  new  and  distant  countries  hardy  pioneers  were 
content  to  send  us  the  fruit  of  virgin  soil  in  return 
for  the  products  of  our  machinery;  both  the  new 
and  old  countries  were  enriched  by  this  exchange, 
and  both  our  colonies  and  the  half-cultivated  tracts  of 
older  States  were  populated  and  rendered  prosperous. 

/  At  home  population  was  congregating  into  cities,  and 
the  stimulating  effect  of  busy  city  life  was  hastening 
the  process  of  the  application  of  the  forces  of  nature 

J  to  the  performance  of  the  bard  work  formerly  done 
by  man,  and  of  the  consequent  increase  of  labour 
needing  brain-power  rather  than  physical  strength. 

But  these  changes  were  not  made  easily,  old 
customs,  old  ideas,  old  virtues  almost,  had  to  be  rooted 
out  and  new  ones  planted,  prejudices  stood  in  the 
way.  Trade  was  not  free,  many  of  its  natural  outlets 
were  absolutely  blocked  in  every  country,  and  while 
it  was  not  understood  what  benefits  would  accrue 


THE  NINETEENTH  CENTURY. 


from  freedom,  classes  interested  in  old  established 
industries  understood  very  well  what  injury  might 
come  to  themselves.  The  development  was  thus 
hindered  for  half  a  century,  till  it  had  gathered  force 
to  overcome  all  resistance. 

With  the  freedom  of  trade  came  an  expansion  of 
statistical  and  economic  knowledge,  and  the  relative 
powers,  populations,  and  resources  of  the  nations  of 
the  world  gradually  became  matters  of  common 
knowledge. 

Thus  this  development  of  foreign  trade  was  essen- 
tial both  to  our  manufactures  and  to  the  general 
furtherance  of  what  for  want  of  a  more  exact  name 
is  called  civilisation. 

It  is  convenient  to  divide  the  economic  results  of  ^; 
inventions  into  two  classes — the  increase  of  eflSciency, 
which   would   be   discussed    in   a   history   of    home 
trade,  and   the   division  of   labour,  which  concerns  , 
us  now. 

Foreign  trade  is  merely  the  carrying  out  of  the  , 
principle  of  the  division  of  labour.  The  benefits  of 
this  division  are  even  more  obvious  when  we  are  deal- 
ing with  countries  with  different  products,  different 
climates,  and  different  aptitudes  and  habits  of  work, 
than  when  dealing  with  people  of  the  same  habits  in  ', 
the  same  country. 

During  the  years  1790-1870  the  history  of  foreign  N 
trade  is  the  history  of  the  division  of  the  world  into 
new  countries  producing  raw  materials  and  old  coun-  . 
tries  manufacturing  them.     That  this  is  so  may  be 
seen  by  considering  the  period  1870-1873,  the  climax 
of  this  century's  commerce,  when  the  inflation  and 


ENGLAND'S  FOREIGN  TRADE  IN 


following  depression  were  mainly  due  to  a  too  great 
acceleration  of  this  process  of  division,  when  new 
countries  produced  more  raw  materials  than  old 
countries  could  profitably  manufacture. 

(  This  division  was  in  its  nature  only  temporary,  for 
each  new  country,  as  it  grew  and  prospered,  has 
taken  to  manufacturing,  and  at  present  no  broad 
distinction  can  be  made  ;  trade  is  still  so  hampered  by 
artificial  hindrances  that  the  natural  divisions  cannot 
show  themselves,  but  it  seems  probable  that,  with  the 
varied  resources  and  aptitudes  that  all  countries 
possess  in  themselves,  a  very  complex  and  intricate 
sub-division  of  work  throughout  the  world  will 
ultimately  be  established. 

/     It  was  obviously  impossible  to  import  raw  materials 

>  and  export  manufactures,  to  make  the  world  one 
great  workshop,  each  part  in  intimate  connection  with 
all  the  others,  without  a  development  of  transport 
and  communication  undreamt  of  in  the  eighteenth 
century.  But  the  genius  of  invention  has  proved 
equal  to  all  calls  on  his  resources  ;  having  first  given 
the  impetus,  he  was  prepared  to  find  the  means ; 
canals,  railways,  steamers,  electricity  were  ready 
directly  they  were  wanted,  and  no  doubt  new  needs 
will  find  equally  quick  satisfaction. 

(^  We  can  sum  up  in  three  words — inventions,  foreign 
trade,  division  of  labour. 

Let  us  now  glance  at  the  state  of  England  at  the 
end  of  the  eighteenth  century,  bearing  in  mind  that 
the  changes  from  that  to  her  present  condition  would 
have  been  impossible  without  foreign  trade.  There 
were    very    limited    manufactures,   in    our    present 


THE  NINETEENTH  CENTURY. 


sense  of  the  word,  no  ships  to  carry  our  superfluous  { 
goods,  no  foreign   demand   for   them,  no   admission! 
to  other  countries :  the  products  of  machinery  were 
known  to  our  ancestors  of  four  generations  ago  as 
little  as  to  savage  races  now. 

The  population  of  Great  Britain  and  Ireland 
was  16,000,000  in  1801 ;  in  1901  it  was  41,500,000. 
Total  imports  and  exports  were  £37,000,000  in 
1791;  in  1901  they  were  £870,000,000.  At  the 
same  time,  the  average  income  and  capital  has 
increased  greatly. 

In  fact,  in  the  eighteenth  century  foreign  trade  was 
of  so  little  importance  to  the  majority  of  the  inhabi- 
tants of  England,  that,  but  for  some  importation  of 
wheat,  the  whole  might  have  been  destroyed  without 
making  any  appreciable  change  in  the  habits  or 
wealth  of  the  people  ;  the  rich  would  have  been 
deprived  of  some  luxuries,  the  poor  of  very  few,  a 
small  class  of  traders  would  have  been  affected,  and 
an  unimportant  branch  of  revenue  destroyed ;  but  no 
other  result  would  have  followed. 

This  was  shown  by  the  little  change  which  the 
great  difficulties  in  the  way  of  trade  at  the  end  of 
the  century,  during  the  wars  with  France,  made  in 
our  habits,  apart  from  the  distress  caused  by  the 
restriction  of  the  wheat  supply. 

It  will  be  our  object  to  trace  briefly  the  causes  and 
events  which  have  led  to  this  startling  development. 

The  invention  and  improvement  of  machinery,  which^ 
made  it  profitable  to  manufacture  in  England  goods  j 
which  were  in  excess  of  our  home  consumption  and 
became  in  demand  elsewhere,  specialised  our  industry,  j 


ENGLAND'S  FOREIGN  TRADE  IN 


increased  its  output,  gave  employment  to  our  grow- 
ing population,  and  facilitated  transport ;  and  that 
exchange  of  manufactures  for  food,  which  is  the 
backbone  of  our  trade,  was  necessarily  initiated. 

Till  the  nineteenth  century  we  were  an  agricultural 
nation,  even  exporting  corn  to  the  Continent.  A  large 
class  of  yeomen,  now  hardly  in  existence,  had  from 
time  immemorial  tilled  their  own  land,  and  subsisted 
almost  entirely  on  its  produce.  Every  village  had 
its  common-field,  where  the  peasants  added  to  their 
wages  by  rights  of  pasture  and  cultivation,  needing 
few  things  that  could  not  be  obtained  at  home  or  at 
the  nearest  market-town. 

At  a  few  towns  special  crafts  flourished,  but  for  the 
most  part  those  manufactures,  which  now  condense 
the  population  so  markedly  in  our  great  towns,  if 
they  were  in  existence  at  all,  were  carried  on  in 
scattered  villages ;  and  the  only  function  of  the  town 
was  to  be  the  market,  the  headquarters  of  the  sale, 
while  annual  country  fairs  were  the  occasion  of  an 
important  part  of  the  countryfolk's  purchases. 

London  was  at  once  the  general  market  of  the 
kingdom,  the  seat  of  many  localised  trades  (tailors, 
silversmiths,  etc.),  and,  with  Bristol  and  Glasgow,  the 
emporium  of  all  foreign  goods,  which  thence  filtered 
very  slowly  through  the  country. 

Many  of  the  main  roads  were  all  but  impassable, 
for  the  improvement  of  the  great  coach  roads  took 
place  at  a  later  date,  and  only  reached  its  climax  just 
before  they  were  rendered  comparatively  superfluous 
by  railways ;  travelling  was  the  privilege  of  the  rich, 
and  migration  of  labour  was  almost  unknown. 


THE  NINETEENTH  CENTURY. 


One  of  the  effects  of  this  difficulty  of  transport  was 
to  make  trade  in  articles  of  large  bulk  and  small 
value  out  of  the  question  when  any  substitute  what- 
ever could  be  obtained  close  at  hand.  For  instance, 
no  one  would  use  coal  where  wood  was  to  be  had ;  the 
iron  foundries  were  established  in  the  neighbourhood 
of  forests  that  wood  might  be  at  hand  for  smelting  ; 
nothing  would  be  of  iron  that  could  be  made  of  wood ; 
and  while  in  Cornwall  even  small  houses  would  be 
built  of  granite,  in  other  counties  granite  would  only 
be  used  for  the  most  costly  buildings. 

Goods  can  now  be  brought  from  the  most  distant  "^ 
countries  at  less  risk,  less  expense,  and  in  almost  the  j 
same  time,  as  they  could  then  be  transported  from  j 
London  to  the  extreme  parts  of  England. 

The  necessity  of  obtaining  wheat  from  abroad  had 
overcome  the  expenses  of  importation  more  than  once 
in  bad  seasons  before  the  end  of  last  century.  In- 
deed, there  is  no  country  which,  if  dependent  on  its 
own  resources,  is  not  in  perennial  danger  of  famine  ; 
even  now,  whole  provinces  of  China,  Russia,  or  India 
may  be  devastated  by  a  bad  harvest.  Before  1790"" 
the  only  foreign  goods  we  imported  on  a  large  scale 
were  silk,  hemp,  wine  and  tropical  produce. 

Till  the  growth  of  the  cotton  trade,  which  may  be 
perhaps  considered  to  date  from  1750,  woollen  cloth 
was  our  only  export  of  importance.  Since  the  time 
of  Edward  III.,  the  Government  had  taken  great  care 
to  foster  the  trade.  Till  the  beginning  of  the  nine- 
teenth century,  English  cloth  was  entirely  made  of 
home-grown  wool,  and  that  there  might  be  a  plentiful 
supply,  exportation  of  wool  or  sheep  was  forbidden 


ENGLAND'S  FOREIGN  TRADE  IN 


under  heavy  penalties.  The  wool  was  all  home-spun 
in  cottages,  villages,  or  towns,  and  either  carried  to 
market  by  the  spinner  (as  flax  was  till  recently  carried 
in  Ireland),  or  collected  by  travelling  merchants  for 
manufacture. 

Even  of  this,  which  formed  our  one  export  trade,  by 
far  the  larger  portion  was  used  at  home.  The  era  of 
trade  with  other  countries  had  not  arrived :  our  re- 
lations with  them  were  chiefly  political,  and  our  rulers 
more  frequently  concerned  with  international  war 
than  with  international  trade. 

2.    ENGLAND'S  COMMERCIAL   RELATIONS  ABROAD. 

f  Till  after  the  Napoleonic  War  the  most  important 
part  of  our  foreign  trade  was  with  our  colonies. 
"Settlements,"  or  "plantations,"  as  they  used  to  be 
called,  were  apparently  regarded  by  the  home  Govern- 
ment as  under  a  favour  in  being  allowed  the  use  of 
the  land  on  which  they  had  settled;  and,  in  conse- 
quence, every  restriction  might  rightly,  it  was 
considered,  be  imposed  to  prevent  their  benefiting 
themselves  in  any  way  which  could  possibly  have 
injurious  eflects  on  England  or  English  trade. 

'  They  were  therefore  obliged  to  export  all  their 
produce  to  us,  and  only  through  us  to  other  countries  ; 
they  were  not  allowed  to  undertake  any  manufactures 
themselves  nor  to  purchase  manufactures  from  any 
but    the    mother   country,   and   no   trade   whatever 

',  might  be  carried  on  except  in  English  ships.  The 
relations  of  all  other  European  countries  with  their 

\  colonies  were  on  the  same  plan.     The  American  War 


THE  NINETEENTH  CENTURY. 


of  Independence  in  reality  gave  this  system  its  death- 
blow, but  it  continued  in  Ibrce  till  the  era  of  Free 
Trade ;  and  the  French  War  actually  benefited  the 
West  Indian  colonies,  for,  when  the  commercial 
restrictions  of  Napoleon  and  England  were  generally 
being  set  at  defiance,  colonial  produce  was  exported 
in  American  ships  direct  to  the  Continent. 

The  "  plantations  "  were  essentially  dependent  on 
exporting  their  produce,  and  by  virtue  of  the  above 
regulations  were  obliged  to  purchase  clothes  and 
manufactures  from  us.  Hence  a  trade,  by  no  means^ 
contemptible,  existed  between  England  and  the  Indies, 
East  and  West ;  tropical  produce  came  to  England, 
and  our  growing  manufactures  had  for  some  time  a 
sufficient  outlet.  It  was  when  the  supply  exceeded 
the  wants  both  of  the  nation  at  home  and  the  colonies, 
that  the  pressing  need  for  continental  trade  was 
felt.  Our  imports  from  the  East  and  West  Indies 
were  50%  of  our  total  imports  in  1785,  but  only  \ 
about  8%  in  1903. 

A  further  effect  was  to  make  England  an  emporium^ 
for  tropical  produce  and  Oriental  goods ;    all  trade 
with  the  East  was  obliged  to  pass  round  the  Cape, 
and  London  was,  therefore,  a  not  inconvenient  centre 
of  distribution.  ' 

England  was  the  victor  in  the  European  competition 
for  colonial  expansion  which  marked  the  eighteenth 
century.  The  Spanish,  Dutch,  and  French  were  all 
obliged  to  give  way  to  England,  and  the  mass  of 
trade  with  the  East  was  under  English  control.  The 
East  Indian,  as  other  smaller  colonial  trades, 
was  in  the  hands  of  a  company  which  monopolised 


ENGLAND'S  FOREIGN  TRADE  IN 


commerce  with  all  countries  east  of  Persia;   which 
ruled   kingdoms   and   carried   on  wars   on  its   own 
account ;  brought  to  England  for  distribution  through 
Europe  the  treasures,  silks,  fruits,  spices,  and  jewels 
of  India;  and  in  its  own  immediate  interest  made 
scarce   and   dear   goods   that  have   since,   owing   to 
competition  and  improved  transport,  become  plentiful 
and  cheap. 
/     Ireland  was  regarded  in  much  the  same  light  as  the 
j  colonies:    no  concession  was   allowed  to  her  which 
;  could  be  supposed  to  injure  England.     Manufacture  of 
glass  and  the  drapery  trade  were   suppressed,  and 
her  agriculture  injured  by  bounties  on  corn  exports 
from   England.     She  was   injured   both   by  the   re- 
strictions forced  on  her  and  by  the  unwise  privileges, 
j  such  as  the   bounties   on   exportation   of   corn   and 
I  manufactures,  which  the  Irish  Parliament  of  1784 
1  granted  to  special  trades.^ 

The  trade  between  England  and  the  United  States 
of  America  has  always  been  of  the  greatest  impor- 
tance both  to  us  and  to  them.  It  was  greatly  un- 
settled by  the  War  of  Independence  (1776);  but  the 
absolute  necessity  to  the  States  of  having  England  as 
an  outlet  for  her  cotton,  and  the  growing  advantage 
of  the  cotton  trade  to  both  countries,  tended  to 
establish  commerce  on  a  sound  and  permanent 
basis. 

Our  European  trade,  owing  to  the  perpetual  wars 

^  For  a  full  discussion  of  this  subject,  see  Cunningham's 
"Growth  of  English  Industry  and  Commerce,"  vol.  ii.,  pp. 
523-529  (1st  Edition);  or  in  1903  Edition  "Modem  Times," 
pp.  372-6,521-2,546. 


THE  NINETEENTH  CENTURY. 


with  France,  was  subject  to  great  vicissitudes  from 
the  earliest  tiroes  till  long  after  the  Napoleonic  War ; 
but  the  genius  for  trading  of  the  Dutch  had,  except 
during  the  short  periods  that  we  were  openly  at 
war  with  them,  kept  open  a  means  of  communication 
with  Central  Europe,  and  our  trade  with  the  States 
bordering  on  the  Baltic  was  regular  and  sound, 
if  undeveloped. 

All  the  commercial  relations  between  country  and^ 
country  were  marred  by  what  may  be  called  inter-  : 
national  prejudice.    Every  admission  of  imports  from  ' 
abroad  was  regarded  as  a  concession  at  the  expense  j 
of  the  importing  nation,  only  to  be  made  when  neces- 
sary  to  obtain  a  similar  concession,  or  when  forced  by 
a  stronger  power.     Trade  was  not  regarded  as  bene-  ^ 
ficial  to  the  purchaser,  but  only  as  profitable  to  the 
vendor.    This,  at  least,  was  the  politician's  and  popular  j 
view,  and  merchants  were  only  beginning  to  realise 
the  fallacy  of  it. 

3.   DIVISION  OF  LABOUE. 

All  exchange  is  a  sign  of  division  of  labour,  and  is 
an  advantage  to  both  parties  concerned,  for  otherwise 
the  exchange  would  not  be  made.  This  has  always  \ 
been  recognised  in  transactions  between  fellow- 
countrymen  ;  but^  when  members  of  two  nations  are 
concerned,  other  considerations,  based  fundamentally 
on  political  or  social  disadvantages,  supposed  to 
follow  changes  in  the  course  of  a  nation's  trade,  and 
also  on  a  want  of  imagination  in  realising  the  actual 
transactions,   have   often   hidden   the   possibility   of 


ENGLAND'S  FOREIGN  TRADE  IN 


using  a  foreign  neighbour's  special  opportunities  and 
skill  to  save  native  work. 
^  Of  all  the  phenomena  of  human  development,  it  is 
perhaps  no  exaggeration  to  say  that  the  progress  of 
division  of  labour  has  been  the  most  continuous  and 
the  most  gradual.  It  requires  and  makes  use  of 
;  every  improvement  in  skill,  every  means  of  more 
rapid  and  intimate  communication,  every  advance  in 
mutual  confidence,  in  security,  and  in  freedom  ;  and 
in  each  of  these  there  is  still  prospect  of  unlimited 
progress. 

It  is  worth  while  to  trace  lightly  this  development 
in  England  since  the  Middle  Ages. 

In  feudal  times,  within  the  precincts  of  each  castle, 
many  trades  were  carried  on ;  the  insecurity  of  life 
and  property  preventing  industries  elsewhere.  Here 
we  have  labour,  divided  indeed,  but  only  among  some 
few  score  hands. 

But  even  in  so  small  a  country  as  England  different 
localities  have  necessarily  different  products.  Copper 
and  tin  must  come  from  Wales  or  Cornwall,  or  not  at 
all.  The  highlands  will  not  produce  the  corn  and 
pasture  of  the  lowlands.  Hence  trade  arose  between 
the  mines  and  the  rest  of  the  country  ;  and  that  form 
of  division,  where  one  man  works  and  another  takes 
the  produce  by  force,  doing  his  share  if  at  all  by 
fighting  a  common  enemy,  was  also  prevalent.  Again, 
certain  men  have  certain  natural  faculties ;  the  Jew 
had  a  faculty  for  accumulating,  and  this  was  used  by 
the  less  provident  baron. 

In  the  course  of  time  trades  became  specialised  to 
certain  towns,  both  by  the  increase  of  prosperity  and 


THE  NINETEENTH  CENTURY.  13 

wealth  of  special  crafts  in  them,  and  especially  by  I 
the  settlement  of  bodies  of  foreign  weavers  or  ; 
spinners,  as  at  Spitalfields  and  Norwich.  And  gradu-  \ 
ally,  as  opportunity  allowed,  it  was  recognised  that  ! 
East  Anglia  was  specially  productive  of  wheat,  Kent  1 
the  suitable  district  for  hops,  the  Cotswold  Hills  and  | 
Salisbury  Plain  the  natural  home  of  the  shepherd,  | 
while  potteries  were  most  successful  in  the  midlands. 

From  Saxon  times  we  hear  of  commerce  with  the  j 
Continent,  whenever  a  powerful  and  peaceful  king 
encouraged   it ;    the   Crusades   gave   England    some  I 
knowledge  of  the  fabled  wealth  of  the  East,  and  Indian  | 
shawls  and  jewels  came  overland  along  the  prehistoric  \ 
caravan  routes  to  Europe,  and  so  to  England.     Thus 
acquaintance  was  made  with  goods  that  could  by  no 
possibility  be  produced  in  England,  and  the  founda- 
tion of  division  of  labour  among  nations  was  laid. 

But  our  immediate  neighbours,  when  we  were  not 
at  war  with  them,  had  wines  and  silks   to   sell  us  i 
which  could  not  be  rivalled  here  ;  and  trade  naturally 
stepped  across  the  Channel. 

With  the  colonisation  of  America,  England's  pro-"^ 
ductive  resources  were  extended  ;  Englishmen  could  j 
now  grow  sugar  and  tobacco,  and  it  was  never  I 
thought  that  full  trade  between  them  and  the  mother 
country  was  not  legitimate,  so  long  as  they  offered  us  j 
nothing  that  we  could  produce  ourselves. 

The  fact  still  to  be  understood  was  that  it  was  proA 
fitable  to  obtain  from  abroad  produce  which  we  were  | 
already   growing    for   ourselves ;    that    though,   for 
instance,  two  nations  have  rich  mines,  a  little  differ- 
ence in  the  diiEculties  of  working  them  may  make  it 


14  ENGLAND'S  FOREIGN  TRADE  IN 

worth  while  for  one  to  leave  its  minerals  untouched, 
and  grow  corn  to  exchange  for  the  ores  of  the  other. 

Prices,  which  in  the  long  run  are  the  true  index  of 
the  direction  in  which  labour  can  most  economically 
be  applied,  showed  many  channels  of  exchange  long 
before  governments  allowed  exports  and  imports. 
And  it  was  exactly  this  question  which  was  fought 
out  in  the  campaign  which  terminated  in  the  repeal 
of  the  Corn  Laws  in  1846. 

Once  allowed  free  play,  labour  very  speedily 
became  divided  between  countries,  each  producing  for 
the  other  the  wealth  for  which  it  was  most  suited. 

One  or  two  instances  may  be  given  of  the  mar- 
vellous extent  to  which  this  division  is  carried  out. 

Italy  can  grow  both  Indian  corn  and  cotton ;  but 
America  supplies  her  with  corn,  and  India  with 
cotton. 

Till  recently  cotton  was  exported  in  vast  quantities 
from  India  and  America  to  England,  to  be  there 
manufactured,  exported,  and  sold  again  in  the  lands 
where  it  was  grown. 

The  element  strontium  is  obtained  in  Argyle,  and 
sent  immense  distances  to  sugar  refineries,  to  effect  a 
trifling  chemical  economy  in  crystallisation. 

Malta  obtains  soil  from  Sicily  and  roots  from 
England,  and  carries  on  an  export  trade  in  potatoes. 

In  the  process  of  obtaining  finished  leather,  skins 
cross  the  ocean  four  times  to  effect  economies  in 
subordinate  treatments. 

In  1800,  some  specialisation  was  already  in  exist- 
ence besides  that  which  different  climates  made 
inevitable.     England  was  the  home  of  woollen  and 


THE  NINE  TEE  NTH  CENTUR  Y.  1 5 

cotton  manufactures,  America  and  parts  of  Europe 
exported  surplus  corn,  timber  came  from  Scandinavia, 
hemp  from  Russia,  metals  from  Spain,  and  wines 
from  the  most  famous  vintages.  But  little  progress 
had  been  made ;  even  internal  trade  was  not  free. 

That  immense  economies  even  now  remain  to  be 
effected  there  can  be  no  doubt.  If  the  principle  that  } 
each  nation  should  produce  only  that  for  which  it  is 
most  suited  were  carried  out,  our  foreign  might  equal 
our  home  trade,  and  that  of  all  nations  be  brought  up 
to  the  same  level  ;  but  there  are  many  causes  which 
prevent  the  rapid  division  of  industries  among 
countries,  and  there  is  a  definite  limit  which  can  be 
reached. 

In  the  process  of  division  much  must  be  sacrificed.' 
Town  after  town,  county  after  county  has  lost  its  : 
trade,  owing  to  a  cheaper  and  better  production  of  its  j 
staple  produce  elsewhere.  Little  loss  has  fallen  to  i 
the  country  as  a  whole,  because  other  industries  have  \ 
necessarily  been  developed,  but  the  result  is,  of  course, 
a  migration  of  population. 

Similarly,  a  nation  may  lose  its  greatest  branch  of 
trade,  and  obtain  no  other ;  and  the  flow  of  popula- 
tion will  take  place  in  exactly  the  same  way  as  from 
town  to  town,  or  (to  take  an  historical  case)  from  the 
south  to  the  north  of  England  ;  many  countries  have 
thus  fallen  in  power  and  population.  It  may  thus  be 
a  true  instinct  which  foresees  the  decadence  of  national 
prosperity  in  any  special  change  of  industry.  If  per- 
manently lower  prices  will  follow  the  change,  it  must 
be  profitable,  but  a  trade  which  depends  on  foreign 
custom  is  always  liable  to  be  displaced  ;  steps  forward 


1 6  ENGLAND'S  FOREIGN  TRADE  IN 

in  this  development  cannot  be  retraced,  and  the 
inevitable  result  will  be  that  one  country  will  be 
sacrificed  for  the  economic  benefit  of  the  world.  This 
sacrifice  may  often  be  a  greater  price  than  the  world, 
or  the  country,  would  willingly  pay. 
/  The  limit  to  the  indefinite  division  is  to  be  found 
in  the  social,  intellectual,  and  moral  objections  to 
specialisation.  It  is  not  pleasant  to  contemplate 
England  as  one  vast  factory,  an  enlarged  Manchester, 
manufacturing  in  semi-darkness,  continual  uproar, 
and  at  intense  pressure  for  the  rest  of  the  world.  Nor 
would  the  continent  of  America,  divided  into  square, 
numbered  fields,  and  cultivated  from  a  central  station 
(  by  electricity,  be  an  ennobling  spectacle.  Variety 
I  will  be  essential  till  the  aesthetic  side  of  man  is 
destroyed. 

The  division  of  intellectual  labour  is  exactly  analo- 
gous, and  has  proceeded  step  by  step  in  the  same 
way. 

In  the  time  of  Roger  Bacon,  a  philosopher  was 
acquainted  with  all  the  learning  of  which  the  world 
was  then  in  possession.  Four  centuries  later,  Newton 
was  known  as  a  mathematician,  and  not  celebrated  as 
metaphysician  or  theologian.  In  this  century,  division 
has  continued  with  enormous  acceleration. 

Knowledge  of  languages  has  branched  till  etymology 
and  ethnology  each  require  a  lifetime's  study.  At 
Cambridge  there  are  six  professors  of  entirely  distinct 
branches  of  mathematics.  In  natural  history  one  man 
will  devote  his  whole  energy  to  a  small  group  of  one 
species ;  in  fact,  instances  could  be  given  and 
multiplied.     Moreover,  the  evils  as  well  as  the  benefits 


THE  NINETEENTH  CENTURY. 


of  specialisation  are  as  obvious  and  as  prevalent  as  in 
the  commercial  world. 

4.   DIGRESSION   ON   CHANGES    IN    THE   VALUE   OF    GOLD 
AND  THE   USE   OF   INDEX   NUMBERS. 

No  comparison  of  any  value  can  be  made  between 
prices  and  wages  current  at  times  separated  by  a  long 
interval,  unless  we  have  some  means  of  comparing  the 
value  of  money  at  the  two  dates. 

The  slightest  consideration  shows  this  when  we  are 
trying  to  realise  the  meaning  of  any  statements  of 
expenditure  in  the  Middle  Ages :  for  instance,  when 
we  read  that  "  threepence  yearly  for  each  house  in  the 
High  Street  of  Leicester  that  had  a  gable"  was  a 
suflficient  bribe  to  buy  important  concessions  from  the 
Earl  of  Leicester,^  we  know  that  we  are  reading  about 
coins  whose  value  has  no  relation  to  the  pence  we  use, 
though  they  may  be  of  a  similar  mould  ;  but  when  we 
open  a  statistical  abstract  and  see 

1877.  1891. 

Wheat        .         .     13s.  9s.   5d. 

we  are  inclined  to  think  that,  in  dealing  with  dates 
within  our  own  memory,  money  has  the  same  value, 
and  a  shilling  means  the  same  thing  in  1877  and  1891. 
But,  as  a  matter  of  fact,  in  1891  Is.  would  go  as  far  in\ 
ordinary  purchases  as  Is.  3d.  in  1877,  and  neglect  of  ! 
this  fact  will  give  us  quite  erroneous  ideas  about  the 
fall  in  the  price  of  wheat.    We  might,  perhaps,  without  j 
this  caution,  prove  to  our   satisfaction  that  English  i 
1  Green's  "  Short  History  of  the  English  People,"  p.  189. 


i8  ENGLAND'S  FOREIGN  TRADE  IN 

I  agriculture  must  be  hopelessly  ruined  by  such  a  fall  in 
price,  while  full  allowance  for  the  change  in  the  pur- 
'  chasing  power  of  money  would  give  quite  a  different 
impression. 

It  is  partly  owing  to  neglect  of  the  fact  that  this 
purchasing  power  has  increased  continuously  since 
1873,  that  the  continual  cries  of  commercial  depression 
obtain  such  ready  credence. 

'     Till  we  have  obtained  a  method  of  comparing  the 
actual  values  of  money  at  different  dates,  we  are  not 
;  in   a   position   to   make  any  statement,  except   the 
vaguest,  about  prices  and  trade  at  different  dates. 

The  object  of  this  section  is  to  explain  the  method 
by  which  this  has  been  done. 
/  The  effects  of  foreign  trade  are  twofold :  it  brings 
j  within  our  reach  goods  which  otherwise  we  could  not 
'  obtain,  and  it  offers  us  articles  with  which  we  are 
-  already  familiar  at  a  reduced  price.  In  order  to 
\  measure  this  second  effect,  it  is  necessary  to  compare 
prices  at  different  dates. 

Prices  must  therefore  be  brought  to  some  standard. 
Naturally  they  are  reckoned  in  gold,  but  the  price  of 
gold  changes  just  in  the  same  way  as  that  of  every- 
thing else,  the  advantage  of  its  use  as  a  standard  of 
value  being  that  its  changes  are  generally  gradual,  and 
only  perceptible  after  a  long  interval.     But  any  cause 
which  makes  gold  more  plentiful  or  more  easy  to 
obtain  lowers  its  value ;  more  gold  must  be  given  for 
other  products,  and  prices  rise. 
i'      A  more  constant  standard  must  therefore  be  ob- 
\  tained  by  which  we  can  trace,  and  then  allow  for,  the 
^variations  of  gold.     This  has  been  accomplished  in  the 


THE  NINETEENTH  CENTURY. 


following  way  : — An  imaginary  budget  is  made  out  of  ^ 
a  great  variety  of  goods,  wheat,  cotton,  wool,  manu- 
factures, tea,  sugar,  and  so  on ;  a  definite  quantity  of 
each  is  taken  in  proportion  to  its  importance ;  this 
budget  is  then  valued  at  the  prices  current  for  each 
article  for  each  different  year.  One  date  is  taken  as 
a  standard,  say  when  the  budget  comes  to  £100.  If 
in  any  year  the  budget  comes  to  less  than  £100,  less 
gold  will  buy  the  same  goods,  prices  generally  have 
fallen,  gold  is  scarce :  if  it  be  greater  than  £100,  more 
gold  is  required  for  the  same  goods,  prices  have  risen, 
gold  is  plentiful.  / 

The  year  that  will  generally  be  taken  in  this  essay 
is  1871.  The  imaginary  budget  being  worked  out 
and  priced  in  that  year  as  100,  corresponding  numbers 
(index  numbers)  have  been  found  for  each  year  by 
Sauerbeck.  Then  any  price  in  any  year  can  be 
valued  in  gold  as  in  1871  by  simple  proportion.  For 
instance,  the  number  for  1889  is  72.  £72  would  go 
as  far  in  1889  as  £100  in  1871.  An  article  that  cost 
£72  in  1889  would  cost  £100  with  gold  at  the  value 
of  1871.  Therefore  to  find  the  price  of  any  article  in 
1889,  at  the  gold  value  of  1871,  the  current  price 
must  be  multiplied  by  -Vy*-. 

Put  in  a  diff'erent  way,  we  find  by  this  method  ] 
what  quantity  of  these  staple  articles  must  be  given  j 
in  return  for  any  other  article  whatever.  Thus  coffee 
was  £3  5s.  per  cwt.  in  1886,  £3  3s.  in  1871.  That  is, 
at  the  earlier  date  less  gold  was  given  in  return  for 
coffee  than  at  the  later.  But  in  1886,  prices  generally 
were  low,  and  the  index  number  is  67.  -^y-  of  £3  5s. 
is  £4  17s.,  and  this  is  the  amount  to  be  compared  with 


20  ENGLAND'S  FOREIGN  TRADE  IN 

1871.     Hence  we  see  that  in  1886,  the  price  of  coffee 
measured  in  other  staple  articles  had  risen  50  per  cent. 
The  prices  of  wheat  in  1871  and  1886  were  lis.  lOd. 
and  7s.  6d.  respectively.     W  of  7s.  6d.  is  lis.  2d. 
Hence   wheat   had   actually,  as   well   as   apparently, 
fallen  in  value  during  that  period,  when  compared 
with  other  produce. 
/      A  remarkable   proof    of    the   accuracy   of    index 
numbers   is   obtained    by   examining    the    shipping 
statistics,  as  will  be  seen  later  ;  ^  for  on  drawing  the 
'  two  curves  representing  the  one,  the  tons  of  shipping 
entered  and  cleared  at  our  ports,  the  other,  total  im- 
ports and  exports  valued  at  1871  prices,  it  is  almost 
impossible  to  separate  them.     These  numbers,  though 
necessarily  founded   on   partial    information,  bear   a 
close  relation  to  the  actual  facts. 
^     Index  numbers  give  no  clue  to  the  amount  of  labour 
expended  in  producing  a  given  quantity  of  goods  ;  that 
must  be  decided   by  other  considerations.     But  we 
find  by  them  exactly  when  one  article  became  cheap 
relatively  to  others  ;  and  if,  for  instance,  we  find  that 
certain   foreign   produce  was   at  a  lower  price  (re- 
latively) after  a  change  of  tariff*,  we  can  say  that  the 
reduction  was  not  due  to  any  fluctuation  of  money 
values,  but  (in  the  absence  of  other  causes)  to  the 
change  of  tariff*.     We  have  a  means  of   finding  the 
relative   changes  in  price   that   followed   any  cause 
whose  effects  we  wish  to  investigate. 
/    The  index  number  has  also  two   more   important 
I  uses.     In  the  first  place,  we  can  find  the  changes  in 
,  the  quantity  of   imports  or  exports  when  we   have 
1  Vide  V.  4  infra. 


THE  NINETEENTH  CENTURY.  21 

only  data  of  the  changes  in  money  value.  For,  in  the 
mass,  goods  imported  and  exported  are  just  those 
whose  changes  we  have  allowed  for  in  forming  the 
index  number.  By  this  means  we  shall  find  that  the"^ 
quantity  (weight  or  volume)  of  imports  and  exports 
has  shown  a  very  steady  and  constant  growth,  at 
dates  when  the  money  values  show  considerable 
fluctuations ;  and  we  shall  find  that  commercial 
depressions  are  often  only  depressions  in  price,  while 
the.  volume  of  trade  continues  as  great  as  ever. 

In  the  second  place,  we  can   compare  wages  ^  at''] 
different  periods.     If  a  man's  wages  were  25s.  in  1871,  j 
and  30s.  in  1886,  an  increase  of   20  per   cent.,  this 
represents  only  a  small  part  of  the  actual  increase ; 
for   in    1886    (index    number    67),    67s.    would    buy 
what  cost  100s.  in   1871.     Hence  30s.   will   buy  in 
1886  what  would  cost  (VV^  of  30s.  =)  45s.  in  1871  ; 
the  increase  in  the  amount  which  the  man  can  pur- 
chase is  80  per  cent.     Without  making  this  allowance,'] 
comparison  of  wages^  is  impracticable.  / 

A  reduction  of   prices  may  be  brought  about  in\ 
three   ways.     First,  by  a  scarcity  of  gold ;  and  this  j 
cause  can  be  to  a  great  extent  eliminated  by  using  I 
the  index  number.     Secondly,  an  increased  efficiency  ' 
in  production  owing  to  machinery,  or  better  use  of 
natural  resources,  gives  more  produce  in  return  for 
the  same  labour,  and,  if  there  is  not  a  corresponding 
increase  in  the   currency,  we   shall  definitely   "  get  , 
more  for  our  money."     Thirdly,  a  new  trade  with  a  ' 
foreign  country  will  enable  us  to  pay  for  goods  from  i 

^  Vide  pp.   105-6  infra.     Special  index   numbers  must  be  ' 
formed  for  wage  comparisons. 


ENGLAND'S  FOREIGN  TRADE  IN 


abroad  with  manufactures  which  we  can  easily  make, 
and  which  our  foreign  customers  desire.  For  in- 
stance, when  we  began  to  buy  foreign  corn  with 
manufactured  goods,  we  obtained  it  at  a  much  lower 
price  than  we  had  paid  for  corn  grown  on  bad  soil  at 
home.^  A  redistribution  of  trade  amono-  countries 
and  nations  may  have  a  great  effect  in  lowering 
prices.  The  changes  due  to  this  source  are  often  com- 
paratively easily  traced,  and  it  is  with  these  changes 
that  we  are  chiefly  concerned  in  connection  with 
foreign  trade. 
/  The  prices  which  changes  in  foreign  trade  may  be 
expected  to  affect  are,  first,  the  prices  of  those  goods 
which  are  imported  (an  improvement  in  the  sources 
of  trade  being  shown  by  a  reduced  price),  and 
secondly,  of  the  goods  exported  in  return  ;  for  an  en- 
larged market  has  in  many  cases  the  eflbct  of  making 
all  those  economies  which  are  due  to  manufacturing 
on  a  large  scale  possible,  and  competition  in  foreign 
;  markets  gives  the  stimulus  for  improved  methods  and 
's.new  inventions.  Cotton  goods  would  not  now  be  so 
cheap  in  England  if  our  factories  had  never  produced 
them  except  for  home  consumption. 

^  Before  the  repeal  of  the  Corn  Laws,  the  necessity  for  in- 
creased supplies  of  corn  was  so  great  that  the  worst  as  well  as 
the  best  ground  was  ploughed,  and  it  was.  of  course,  the  work 
necessary  on  the  inferior  land  that  governed  the  prices. 


THE  NINETEENTH  CENTURY.  23 


I  J.— THE  FRENCH  WARS,  1793-1815. 

1.  THE  EXPENSE   OF  THE    WAR  AND  HINDRANCES 
TO   TRADE. 

The  year  1793  is  the  natural  date  at  which  to  begin 
a  review  of  the  nineteenth  century's  trade,  because 
just  before  that  date  prices  and  trade  were  in  a  condi- 
tion typical  of  the  eighteenth  century,  and  because 
that  was  the  date  of  the  commencement  of  the  war 
that  ushered  in  the  present  century,  and  which  had 
such  important  effects  in  stamping  permanent  char- 
acteristics on  the  foreign  trade  of  this  and  other 
countries. 

Briefly,  the  history  of  the  war  is  as  follows : — In 
consequence  of  the  attitude  of  the  French  after  the 
Revolution,  war  was  declared  between  England  and 
France  in  1793.  The  injuries  inflicted  on  the  trade 
and  vessels  of  neutral  nations  led  to  the  formation  of 
a  coalition  of  Russia,  Sweden,  and  Denmark  in  an 
armed  neutrality ;  this  led  to  the  battle  of  Copen- 
hagen, and  the  coalition  was  dissolved.  Hostilities 
were  suspended  for  a  year  in  1802,  and  on  the  renewal 
of  the  war  Russia  joined  Austria  and  England.  The 
French  were  beaten  at  sea  in  the  battle  of  Trafalgar 
in  1805,  but  by  land  Austria  and  Russia  were  in  the 
same  year  defeated  at  Austerlitz.  The  next  stage 
in   the   war   was    Wellington's   campaign   in  Spain, 


S4  ENGLAND'S  FOREIGN  TRADE  IN 

1807-1814,  which  he  gradually  conquered,  and  whence 
he  marched  on  France.  Meanwhile  Napoleon  under- 
took a  disastrous  expedition  into  Russia,  from  which  he 
retreated  with  great  loss  (1812),  and  in  1814  France 
was  attacked  on  all  sides,  and  Napoleon  abdicated  and 
retired  to  Elba. 

He  returned  in  1815,  and  a  very  rapid  campaign 
culminated  in  the  battle  of  Waterloo,  in  which  the 
French  were  totally  defeated,  and  Napoleon  was 
imprisoned  in  St.  Helena. 

From  1812  to  1815  we  were  also  engaged  in  a  war 

with  the  United  States  of  America,  owing  to  the 

injurious  effects  of  our  policy  on  neutral  trade. 

/      In  times  of  peace  during  the  eighteenth  century, 

I  England's  normal  public  expenditure  was  less   than 

!  £15,000,000  per  annum  ;  during  the  twenty- two  years 

j  of  war  the  average  was  £69,000,000,  so  that  the  ex- 

j  pense  of  the  war  may  be  estimated  in  round  numbers 

as  £1,000,000,000.     This  was  the  amount  which  was 

1  withdrawn    from    productive    labour.       With     this 

!  pecuniary  expense  there   was   a   constant   drain   of 

I  able-bodied  men  from  all  employments.     In  thousands 

;  of  families  the  bread-winner  was   at   the  war,  and 

absolute  poverty  was  in  many  houses,  while  labourers 

could  hardly  be  obtained  for  necessary  work. 

!       The  distress  was  increased  by  a  succession  of  some 

i  of  the  worst  harvests  on  record,  in  1794,  1795,  1799, 

is^l800,  1804,  1809. 

From  1793-1804,  prices  were  far  above  the  former 
average,  owing  to  the  badness  of  these  seasons,  the 
expense  or  impossibility  of  importation,  and  the  high 
rate  of  interest,  which  was  caused  by  the  immense 


THE  NINETEENTH  CENTURY.  25 

loans   to   the   Government.      Wages   of   agricultural  I 
labourers  and  artisans  necessarily  rose,  or  they  could  j 
not  have  obtained   a   bare   subsistence  ;    while  such 
was  the  disorganisation  of  manufacturing  trades,  that 
factory  hands  did  not  obtain  an  adequate  increase,  J 
and  were  on  the  brink  of  starvation. 

For  many  years  the  whole  nation  was  kept  at  high 
tension,  owing  to  the  immediate  expectation  of  an 
invasion  of  the  French,  for  which  preparations  were 
being  made  within  sight  of  our  coasts,  and  by  an 
exaggerated  fear  of  Napoleon,  who  was  regarded  as 
possessing  almost  supernatural  powers.  Every  nerveN 
was  strained  to  procure  money,  ships,  and  men  for  the 
struggle,  and  the  interests  of  trade  were  not  only! 
directly  injured,  but  suffered  also  from  neglect. 

During   these   years  our  foreign  trade  was  often 
reduced  almost  to  nil.     The  peculiarity  of  this  war 
was  that  strenuous  attacks  were  directed  against  the 
trade  of  the  enemy  as  well  as  against  the  hostile 
forces.     Ships,  sailing  under  neutral  flags,  were  over- 
hauled, and  confiscated  if  containing  goods  for  the 
enemy ;    and  colonial  trade  was  a  special  object  of 
attack.     The  dangers  of  transport  were  so  great  that/ 
the  rate  for  insurance  was  prohibitory.     In  1808  the 
price   of   80s.    per   quarter   for  wheat   produced   no 
importation;   in  1810  freight,  insurance,  and  licence 
amounted  to  50s.  per  quarter.     The  contest  of  this\ 
nature  was  at  its  height  when  orders  in  council  were 
issued  in  England,  1807,  decreeing  that  "no   vessel  \ 
shall  be  permitted  to  trade  from  one  port  to  another,  J 
both  which  ports  shall  belong  to  or  be  in  the  posses-  I 
sion  of  France  or  her  allies,  or  shall  be  so  far  under  -■ 


26  ENGLAND'S  FOREIGN  TRADE  IN 

\  their  control  as  that  British  vessels  may  not  freely 
trade  thereat  "  ;  and  further,  that  "  all  such  ports  shall 
be  considered  in  a  state  of  blockade  "  ;  which  Napoleon 
answered  in  the  Berlin  and  Milan  decrees,  declaring 
the  British  Isles  in  a  state  of  blockade,  prohibiting  all 
correspondence  with  them,  and  declaring  all  English- 
men  abroad    prisoners   of    war,   all    English   goods 

,  confiscate,   and    forbidding    any   nation   whatsoever 

i  to  obey  the  "  orders  in  council."  As  a  consequence, 
quantities  of  English  goods  were  burnt  in  Hamburg 
and  elsewhere. 

/  Thus  the  effects  of  the  war  were  first  to  give  a 
stimulus  to  our  trade  with  Russia  and  other  countries 

j  which  supplied  us  with  naval  or  military  stores  ;  then 
to  stop  our  trade  with  France  and  the  countries  of 

j  the  armed  neutrality  till  1800  ;  while  after  the  peace 

I  of  Amiens,  the  ports  of  Russia  and  the  Baltic  coun- 
tries were  open,  but  the  risks  of  transport  were  almost 
prohibitory,  and  trade  with  the  rest  of  Europe,  which 
was  under  French  influence,  was  stopped  as  far  as  it 
was  possible  for  arbitrary  enactments  to  hinder  it. 
Finally,  American  trade  was  hopelessly  disorganised 
from  1812  to  1815.     In  spite  of  all  these  obstacles, 

I  not  only  was  progress  made  internally,  but  our  export 
trade  actually  increased  ;    while  £22,000,000  was  the 

j  highest  value  of  exports  before  1793,  the  average  from 

1^1805-1815  was  £41,000,000. 

Ark  Wright's   inventions   had   been   released    from 

I  patent  rights  in  1798 ;  Cartwright's  loom  had  come 
into  use  in  1801  ;  woollen,  cotton,  and  silk  industries 
were  growing,  and  there  was  great  demand  for  both 
goods  and  machines  on  the  Continent.     The   efforts 


DIAGRAM  E. 

eh  owing J^ucluations  qf/mporfs  and  Hxports  oLiTLng  the  Ha./ 
A. Exports  .  B  Imports  . 


/sd.  000  000 


HI 


i-u 


i^z 


2^. 


l'^ 


I 


I 


\l\ 


■S3  341795*   •'    '•  MiaOO"    "    "   *'i806'°*  "'    °'    "1810"    "    ■*    "1815  ' 
>Vo  ^i^urts  ob/ainabU  /orlxporti  1800-05 


THE  NINETEENTH  CENTURY.  27 

made  to  evade  the  Milan  and  Berlin  decrees  were  so 
great  that  a  fall  in  prices  and  a  commercial  crisis 
followed  in  1811,  because  in  hope  of  the  great  prices 
to  be  obtained  on  the  Continent  more  goods  had  passed 
the  barriers  than  could  find  a  market  which  paid  for  j 
so  great  expense.  Trade,  driven  from  straightforward  } 
methods,  adopted  every  devious  means  of  eluding  the 
prohibitory  decrees.  Ships  sailed  under  false  colours, 
and  with  false  papers,  and  changed  their  destination 
when  on  voyage.  Goods  were  landed  at  night,  or  took 
most  circuitous  routes  to  reach  their  market.  A  spirit 
of  gambling  and  speculation  induced  the  boldest 
hazards,  and  many  romantic  adventures  and  hair- 
breadth escapes  were  the  result.  At  each  short  cessation 
of  hostilities  immense  quantities  of  goods  were  shipped. 
"  Never  before  was  the  shipping  of  this  country  em- 
ployed at  higher  freights  ;  and  scarcely  a  ship  belong- 
ing to  any  other  nation  could  sail  without  a  licence 
from  the  Government  of  this  country.  The  whole  of 
the  exportable  produce  of  the  East  and  West  Indies, 
and  of  a  great  part  of  South  America,  came  to  our 
ports ;  and  no  part  of  the  continent  of  Europe  could 
obtain  a  supply  of  coffee,  sugar,  and  other  colonial 
articles,  or  of  the  raw  materials  of  some  of  their 
manufactures,  except  from  this  country."^  For 
England  had  command  of  the  seas,  especially  after 
the  battles  of  the  Nile,  Copenhagen,  and  Trafalgar, 
and  used  it  to  her  advantage. 

One  interesting  aspect  of  the  war  is  the  illustration 
it  affords  of  the  condition  of  England  when  cut  oft' 
from  foreign  trade. 

^  Tooke's  "  History  of  Prices,"  i.  105. 


28  ENGLAND'S  FOREIGN  TRADE  IN 

(  As  regards  manufactures,  which  were  only  then 
becoming  of  importance,  the  effect  was  to  postpone 
and  hinder  the  new  developments.  It  is  in  con- 
nection with  the  supply  of  food  that  the  period  is  so 
instructive. 

The  prices  of  corn  during  the  years  1793-1815  were 
as  follows : — 


OFFICIAL  ANNUAL 

AVERAGE. 

Per  Quarter. 

Per  Quarter. 

Per  Quarter. 

1793 

49s. 

3d. 

1801 

119s. 

6d. 

1809  97s. 

4d. 

1794 

52s. 

3d. 

1802 

69s. 

lOd. 

1810  106s. 

5d. 

1795 

75s. 

2d. 

1803 

58s. 

lOd. 

1811  95s. 

3d. 

1796 

78s. 

7d. 

1804 

62s. 

3d. 

1812  126s. 

6d. 

1797 

53s. 

9d. 

1805 

89s. 

£d. 

1813  109s. 

9d. 

1798 

51s. 

lOd. 

1806 

79s. 

Id. 

1814  74s. 

4d. 

1799 

69s. 

Od. 

1807 

75s. 

4d. 

1815  75s. 

7d. 

1800 

113s. 

lOd. 

1808 

81s. 

4d. 

Since  1820  the  annual  average  has  never  been 
above  74s.  9d.,^  while  the  average  from  1821-1890  is 
51s.  9d.  The  dearth  which  caused  these  prices  was 
exceptional  in  the  number  of  successive  bad  harvests  ; 
but  isolated  seasons  equally  unproductive  have  oc- 
curred since.  With  the  small  population  of  nine 
millions  ^  in  1801,  wheat  rose  to  126s.  a  quarter.  With 
the  population  in  1904  of  thirty-four  millions,  a  dis- 
continuance of  foreign  supplies  w^ould  cause  a  famine 
unequalled  in  the  experience  of  Europe. 

It  is  important  to  notice  that  the  petition  for  cessa- 
tion of  the  war  and  liberation  of  trade  came  from 
the  Lancashire  manufacturers ;  for  the  necessity  for 

^  In  the  Crimean  War. 
^  England  and  Wales  only. 


D/AGRAM  m. 

showing  Ihcfluxtuations  qfaruuuil  Jiveraqe  3-ice  ofW/ieoU  (per  imperial  Quarftr) 


I 


ie.oo- 


•5M- 


•^.dd 


li 


^l 


11 


m: 


^ 


1793  96    9'    s*   33)800°'   ^   "    °'»I805»'  ■"'  '"'    °'l8l0"     '^    "    ■*  I8l5 


THE  NINETEENTH  CENTUR  Y.  29 

foreign  trade  was  first  felt  by  those  who  had  goods  to 
sell,  not  by  the  country  in  general. 

The  interest  of  the  period  is  great  at  the  present 
time  in  view  of  the  long-threatened  European  war. 
Is  it  now  possible  to  combine  war  and  trade  ?  If  all 
Europe  is  fighting,  and  we  are  neutrals,  shall  we 
continue  to  get  corn  from  Russia  and  Germany,  and 
silk  from  France  ?  Will  any  merchandise  pass  inter- 
European  frontiers  ?  Will  there  be  a  second  Berlin 
decree,  and  will  all  nations,  dependent  as  they  are 
more  than  ever  on  supplies  from  each  other,  be  thrown 
back  on  their  own  resources,  so  that  each  of  the 
choicest  products  of  civilisation,  science,  and  commerce 
will  have  added  new  and  terrible  weapons  to  the 
armoury  of  nations  ? 


2.   PERMANENT  EFFECTS   OF  THE   WAR   ON   COMMERCE. 

The  victory  of  England  in  the  Napoleonic  War  was 
as  important  in  its  commercial  as  in  its  political  effects. 
In  the  first  place,  England  was  left  in  command  of  the"^ 
seas.     All  her  ancient  rivals,  at  one  time  the  Spaniards 
but  more  recently  the  Dutch,  were  beaten  off*  the  sea, 
and  there  was  only  left  the  United  States  of  America,  [ 
already   suffering   from  the  inferiority  of   her   own  ! 
wood    for    shipbuilding,   and    artificial    dearness   of 
imports.      Owing    to    the    colonial   regulations,   the  ■ 
great  part   of   the   trade   of   the    West   Indies,  and 
practically  all  that  of  India,  was  ours ;  and  no  vessel, 
except  European  vessels  carrying  the  goods  of  the 
country  from  which  they  came,  could  trade  in  our 


30  ENGLAND'S  FOREIGN  TRADE  IN 

ports.^  All  this  was  the  principle  of  the  Navigation 
Law  in  full  swing,  but  in  that  time  of  monopoly  and 
protection  it  was  esteemed  a  great  advantage,  and 
our  supremacy  at  sea,  being  founded  on  real  superiority, 
has  endured. 

■       In  the  second  place,  though  the  drain  of  money 

i  and  men  had  been  as  severe  in  England  as  in  the  rest 
of  Europe,  yet  England's  credit  was  better,  and  the 
war  had  been  fought  in  the  midst  of  Spain,  France, 
Germany,  Russia,  and  Belgium,  while  we  in  our 
island  had  escaped  the  worst  effects  of  its  near 
approach. 

/  The  first  of  these  was  at  once  the  maturing  of  our 
greatest  industry,  and  the  means  of  transport  for  the 
goods  of  others. 

The  second  helped  to  give  us  that  start  in  inven- 

;  tions,  machinery,  and  manufactures  which,  though  we 
may  be  naturally  superior  to  continental  nations  in 
such  ingenuity,  gave  us  most  important  advantages 
in  the  race  in  mechanical  skill  which  was  so  keen  in 
the  next  generation,  and  enabled  us  to  establish  our 

i  reputation  and  throw  other  nations  into  our  debt. 

j  It  was  a  matter  of  complaint  that  in  the  negotia- 
tions which  followed  the  downfall  of  Napoleon,  the 
commercial  interests  of  England  were  neglected  and 
possibilities  of  trade  expansion,  which  were  within 

lour  power,  were  allowed  to  lapse. 

For  long  after  the  war  our  relations  with  France 
were  seldom  of  an  amicable  nature.     The  French  did 

■"  "  No  subject  of  the  King  should  ship  any  merchandise  out- 
ward or  homeward,  save  in  ships  of  the  King's  allegiance,  on 
penalty  of  forfeiture  of  vessel  and  cargo." 


THE  NINETEENTH  CENTURY.  31 

not  quickly  forget  their  defeat ;  every  difference  and 
dispute  was  exaggerated,  and  every  disadvantage  in 
the  way  of  our  trade  considered  a  gain  to  them. 
Trade  between  near  neighbours,  with  such  different  ^ 
products  and  climates,  carries  benefits  so  obvious  as 
to  counteract  this  jealousy  and  suspicion  to  a  limited 
extent ;  but  except  between  the  years  1860  and  1873, 
trade  has  been  heavily  restricted. 

If,  on  the  one  hand,  the  Continent  as  a  whole  was^ 
so  exhausted  with  the  war  that  in  Europe  there  were 
no  longer  any  dangerous  rivals  by  sea  or  land ;  on 
the  other,  the  general  poverty  made  them  indifferent 
customers :  which  latter  situation  is  more  injurious  to 
trade  than  the  former. 

Our  attention  is  therefore  turned  to  our  colonies  and 
to  the  United  States  of  America.     We  were  left  with 
a  free  hand  for  colonisation,  and  for  developing  our 
colonial  trade  under  the  old  system;  and  our  trade 
with  India  and  the  East  could  grow  peacefully.     We^ 
find  that  the  percentage  of  our  whole  exports  which  ^ 
our  colonial  trade  accounted  for  increased  from  1815  to  | 
1828,  while  the  Indian  trade  grew  slowly.      But  our  j 
condition  was  not  altogether  prosperous;  our  bad  fiscal , 
system,  the  enervating  poor  law,  and  our  stupendous  | 
debt  did  not  conduce  to  rapid  development. 

Our  manufactures  continuing  to  grow,  cotton  im- 
ports necessarily  increased  also :  that  is,  our  trade 
with  the  United  States  of  America  increased  in  bulk, 
but,  owing  to  reduced  prices,  not  greatly  in  value. 

Our  objectless  war  in  1812-15  had  given  an  impetus^ 
to  the  States'  mines  and  manufactures  during  the  ; 
time  that  no  imports  could  be  obtained  from  us.     To  ! 


32  ENGLAND'S  FOREIGN  TRADE  IN 

protect  these  a  high  tariff  was  imposed  of  25  per  cent, 
which,  with  many  variations,  increased  to  a  maximum 
of  45  per  cent,  in  1830.  This  was  the  beginning  of 
the  incessant  changes  of  and  battles  over  the  tariffs, 
which  are  now  such  an  important  factor  in  commercial 
history.  It  was  then  that  many  of  those  "  interests  " 
were  created  which  have  necessitated  taxes  to  protect, 
taxes  to  compensate,  and  taxes  to  equalise  without 
number.  The  States,  like  France,  for  long  had  a 
dislike  for  the  English,  generated  at  the  time  of  the 
War  of  Independence,  and  amounting  at  critical  times 
almost  to  frenzy;  but  it  has  been  the  policy  of  a 
party  rather  than  universal ;  and  we  were  such  good 
customers  that  trade  was  allowed,  if  not  promoted. 
(  The  great  advantages  to  both  parties  overcame  natural 
repugnance,  and  trade  has  been  the  greatest  source  of 
peace  between  us  and  the  Americans. 


3.   THE   INDUSTRIAL   EEVOLUTION. 

The  change  that  was  passing  over  the  country 
during  this  period  is  generally  spoken  of  as  the 
Industrial  Revolution. 
/  The  era  of  inventions  began  in  the  middle  of  the 
eighteenth  century.  Their  tendency  was  twofold : 
first,  to  do  by  a  machine  every  simple  monotonous 
movement,  such  as  combing  wool,  which  had  hitherto 
been  accomplished  by  hand ;  secondly,  to  apply 
natural  forces,  water,  steam,  and,  later,  gas  and  elec- 
tricity, to  accomplish  what  had  formerly  exhausted 
the  strength  of  men  or  animals. 


THE  NINETEENTH  CENTURY.  33 

The  chancre  in  the  meaning  of  the  word  "manu- 
facture," originally  justifying  its  literal  meaning  of 
"  making  by  hand,"  to  its  present  sense  of  producing 
in  large  quantities  by  the  help  of  machinery, 
clearly  shows  the  course  of  the  woollen  and  cotten 
industries. 

Woollen  manufacture  was  naturally  one  of  the 
earliest  subjects  of  inventive  skill.  The  motion  of 
combing  by  hand  was  very  difficult  to  imitate  with 
machinery  ;  Cartwright's  first  attempts  failed,  and  till 
his  first  machines  were  much  altered  and  improved, 
very  little  use  could  be  made  of  them.  In  1801,  how- 
ever, the  machinery  came  into  general  use  for  certain 
classes  of  work. 

It  was  entirely  due  to  Arkwright's  and  Crompton's' 
inventions  of  the  spinning-jenny  and  mule  that  the 
cotton  trade  became  of  any  importance.  Such  inven- 
tions first  caused  and  then  developed  this  trade,  and 
many  were  afterwards  modified  and  applied  to  wool 
spinning  and  cloth  manufacture. 

The  growth  of  these  improvements  would  have 
been  of  comparatively  little  avail  without  a  new 
motive  power,  and  concurrently  with  them  the  steam- 
engine  was  being  perfected.  An  earlier  step,  however, 
was  the  use  of  water-power,  and  for  a  short  time 
the  neighbourhood  of  running  streams  was  the  chief 
influence  in  locating  manufacturing  districts. 

Steam,  which  had  already  been  used  for  pumping 
water  from  mines,  was  first  applied  to  cotton  machinery 
in  1785.  Since  then  its  increased  application  has 
been  continuous. 

In  spite  of  the  devastating  effects  of  tlie  war,  the 


34  ENGLAND'S  FOREIGN  TRADE  IN 


population  increased  at  a  continually  accelerated  speed 
between  the  years  1781  and  1821.  The  population 
of  England  and  Wales  in  the  following  years  was 
approximately  : — 

1781 7,400,000 

1791,          .         .         .        .         .  8,200,000 

1801, 9,200,000 

1811, 10,800,000 

1821, 12,700,000 

In  the  last  two  decades  of  the  eighteenth  century 
masters  and  men  were  alike  prosperous  owing  to  the 
immense  increase  of  the  trade.  At  first  the  intro- 
duction of  machinery  employed  more  hands  than  it 
displaced.  Every  possible  building  was  used  for 
looms  ;  everyone  who  could  make  a  start  also  made  a 
fortune  ;  a  family  of  workers  could  earn  from  £2  to 
£6  a  week.  Thus  the  increasing  population  was 
rapidly  employed. 

The  situation  led  to  the  following  state  of  trade : — 
The  output  soon  exceeded  the  home,  but  was  far 
below  the  foreign  demand ;  raw  materials  were 
urgently  needed,  and,  in  the  case  of  wool,  with  difii- 
culty  obtained.  Thus  imports  were  greatly  increased, 
and  in  payment  for  these  the  manufactured  articles 
not  required  at  home  were  exported. 

In  the  time  of  the  war  a  great  quantity  of  timber, 
hemp,  and  other  stores  was  imported  to  equip  the 
army  and  navy.  Thus  the  war  itself  had  one  effect 
in  increasing  trade. 

Finally,  as  will  be  immediately  seen,  a  smaller  pro- 
portion of  the  population  was  employed  in  agriculture  ; 


THE  NINETEENTH  CENTURY.  35 

at  the  same  time  that  the  population  increased,  the 
producers  of  food  became  fewer,  and  the  harvests 
failed  ;  a  great  importation  of  wheat  was  necessitated, 
and  for  this  again  our  manufactures  paid.  ^ 

It  was  under  these  circumstances  that  the  struggle'^^j 
against  the  Corn  Laws  was  generated.  The  new  | 
manufacturing  class  had  no  interest  in  keeping  up  the 
price  of  wheat,  the  special  object  of  the  landowning, 
which  was  still  the  most  influential,  class.  They 
needed,  on  the  other  hand,  cheap  food  for  the  work- 
men, that  wages  might  not  be  unreasonably  high,  an 
open  market  for  their  goods,  and  foreign  products  in 
return  for  them. 

The  change  in  the  distribution  of  the  population 
is  the  most  striking  evidence  of  this  change  of  the 
country's  staple  occupations. 

In  the  first  place,  population  was  concentrated  inN 
towns.  Steam  effects  its  maximum  economies  when^ 
many  machines  can  be  worked  by  one  engine,  in  a 
limited  space,  and  where  supervision  and  organisation 
are  easy,  so  that  the  most  profitable  factories  are  those 
which  employ  several  hundred  hands  in  one  building. 
Again,  where  trade  advantages  point  to  a  district  as  a  ^ 
favourable  situation,  there,  not  one  but  many  factories 
will  be  placed.  Thus,  instead  of  a  small  population 
engaged  in  weaving,  spinning  and  combing,  scattered 
through  a  large  district,  we  have  an  immense  crowd 
concentrated  in  one  place.  In  1760,  there  were, 
perhaps,  twelve  provincial  towns  of  more  than 
10,000  inhabitants  in  England  and  Wales,  of  which 
only  two  (Bristol  and  Norwich)  contained  more  than 
50,000.     In  1901,  the  population  of  12  towns  was  over 


36  ENGLAND'S  FOREIGN  TRADE  IN 


200,000,  of  about  30  over  100,000,  of  about  60  over 
50,000  ;  but  during  the  nineteenth  century  the  total 
population  of  the  United  Kingdom  had  only  increased 
three-fold. 

Considered  at  such  a  wide  interval,  the  difference 
may  appear  exaggerated  ;  but  the  process  has  been 
continuous,  and  its  continuance  is  very  perceptible  at 
the  present  day  in  England,  while  the  same  propor- 
tionate growth  of  towns  is  one  of  the  most  marked 
features  of  the  statistics  of  all  industrial  countries. 

Secondly,  the  relative  numbers  of  those  engaged  in 
agriculture  and  manufacture  and  other  trades  have 
entirely  changed. 

In  1760  (according  to  Arthur  Young), 
farmers  (and  agricultural 

labourers)  were         .         .         ,         .33  per  cent. 
,,          manufacturers    and    arti- 
sans   35        ,, 

of  the  whole  population. 

In    1881,   farmers  (and   agricultural 

labourers)  were  .         .     13  per  cent. 
„  manufacturers         .         .28       ,, 

„         builders.         .         .         .       9        ,,         of  the  whole. 

Thus  agriculture  has  proportionatelj^  much  de- 
creased, manufacture  (allowing  for  the  different 
methods  in  which  the  tables  were  compiled)  remained 
about  the  same,  and  other  occupations  increased 
greatly. 

Thirdly,  there  has  been  a  great  shifting  of  the 
relative  strength  of  the  population  from  the  south 
to  the  north. 

In    1760,  the   counties  which  were  most  densely 


THE  NINETEENTH  CENTURY.  37 

peopled  were  Gloucester,  Wilts,  Somerset,  Yorkshire, 
Norfolk,  owing  to  the  wool  trade  ;  Surrey,  Herts, 
Bucks  and  Berks,  from  the  goodness  of  their  agri- 
culture ;  and  Worcester,  Stafford  and  Northampton, 
from  the  manufactories  there  situated. 

In  1881,  London  had  expanded  across  the  boundaries 
of  Surrey  and  Kent ;  Lancashire,  Durham,  Stafford, 
Warwick,  and  the  West  Riding  were  the  most  thickly 
populated  counties ;  and  of  the  twenty-three  largest 
provincial  towns,  eighteen  were  north  of  a  line  drawn 
from  the  Severn  to  the  Humber.  The  effect  of  the 
movements  of  the  population  has,  therefore,  been  to 
empty  the  counties  in  the  south  and  in  the  Thames 
basin,  to  leave  the  midlands  populous,  and  to  in- 
crease very  greatly  the  population  of  the  northern 
counties. 

This  change  emphasises  what  is  meant  by  the  "  in- 
dustrial revolution."  We  used  to  be  an  agricultural 
nation,  self-contained  and  self-supporting.  We 
became  a  manufacturing  nation,  for  a  long  time  the 
world's  manufacturers,  and  till  recently  our  exports 
far  exceeded  those  of  any  other  country.  Our  trade 
is  especially  to  work  up  raw  materials ;  our  imports 
must,  therefore,  be  immense  to  supply  our  factories ; 
and  since  the  proportion  of  those  who  produce  food 
directly  is  low,  we  must  also  import  wheat  in  great 
quantities. 

We  of  this  generation,  born  after  the  great  battle  of 
Free  Trade  was  fought  and  won  in  England,  can 
hardly  realise  how  modern  is  every  condition  of  our 
present  trade ;  that  barely  four  generations  ago 
factories  were  almost  unknown  ;  and  that  it  is  only 


38  ENGLAND'S  FOREIGN  TRADE  IN 

a  century  since  our  manufacturers  were  struggling 
for  a  hardly  recognised  existence,  unrepresented  in 
Parliament,  with  every  fiscal  law  against  them,  while 
a  great  war  was  draining  the  strength  of  the  nation, 
and  hindering  every  development  of  commerce. 


THE  NINETEENTH  CENTURY.  39 


III— THE  BATTLE  OVER  FREE  TRADE. 

1.   INTEODUCTORY. 

In  considering  a  diagram^  of  English  imports  and 
exports  since  1800,  the  first  glance  shows  the  immense 
increase  of  our  foreign  trade,  and  however  familiar 
the  fact  may  be,  it  is  difficult  to  realise  that  our  trade 
now  is  at  least  twelve  times  greater  in  pounds 
sterling  (or  allowing  for  the  great  increase  in  the 
purchasing  power  of  money,  twenty-four  times 
greater)  than  it  was  a  century  ago. 

On  closer  inspection,  it  is  seen  that  the  growth  is 
naturally  divided  into  four  periods :  from  1800  to 
1826,  when  trade  is  almost  stagnant  ;  from  1826  to 
1846,  when  imports  increased  at  the  continued  rate  of 
3 J  per  cent,  per  annum  ;  -  from  1846  to  1872,  when 
trade  progressed  at  an  enormous  rate,  imports  in- 
creasing nearly  four-fold  in  twenty-six  years,  or  at 
the  rate  of  63-^  per  cent,  per  annum  ;  ^  and  from  1872 
onwards,  a  period  which  is  not  yet  complete,  and  which 
is  characterised  by  three  great  fluctuations,  with  ; 
the  result  that  imports  had  increased  about  50  per  ; 
cent,  by  1903  (population  having  increased  about  33  i 

"1  Vide,  Diagram  i, 

2  £38,000,000  (Imports  in  1826)  x  (-V%V')  "^ 

=  £76,000,000  (Imports  in  1846). 

3  £76,000,000  X  (J3%^^i)2  6  =£355,000,000  (Imports  in  1872). 

D 


40  ENGLAND'S  FOREIGN  TRADE  IN 

per  cent.),  while  the  proportion  of  total  imports  and 
exports  to  population  was  nearly  the  same  in  1872 
and  1903. 

Considering  next  in  rough  outline  the  historical 
events  which  we  should  expect  to  affect  our  trade,  we 
find  that  effects  follow  causes  very  closely. 

The  effects  of  the  war  which  we  have  already  con- 
sidered, and  the  exhaustion  which  followed  it,  fully 
account  for  the  character  of  the  diagram  in  the  first 
period. 

The  peace  which  continued  without  interruption 
for  forty  years  is  shown  with  equal  clearness  in  the 
progress  of  trade. 

In  1820,  the  battle  of  Free  Trade  was  begun  by  the 
"  Petition  of  the  Merchants,"  and  with  sometimes  slow, 
sometimes  rapid  success,  was  fought  till  1846,  the  date 
of  the  repeal  of  the  Corn  Laws.     During  this  time 
English   history   deals   almost    entirely   with    home 
>  politics.     This  is  our  second  period,  which  it  is  hard 
to  separate  from  the  third,  the  great  period  of  expan- 
sion.    For  the  new  stream  of  science  and  invention 
which  rose  in  the  middle  of  the  eighteenth  century 
was  diverted  by  war,  restricted  by  monopolies,  and 
'  dammed    by   the    artificial    barriers    of    tariffs    and 
customs  ;  but  when  these  hindrances  were  removed, 
j  the   risen  flood  burst  all   bounds,   and   carried    our 
;  commerce  to  a  mark  which  the  ordinary  current  of 
■  trade  has  only  recently  enabled  us  to  pass. 

With  the  acceptance  of  Free  Trade,  business 
expanded  with  immense  rapidity :  the  extension  of 
railways,  the  introduction  of  steam  ships,  the  use  of 
the  telegraph,  the  discovery  of  gold  in  Australia  and 


THE  NINETEENTH  CENTURY.  41 

California,  the  growing  importance  of   the  colonies, 
and  the  opening  of  the  Suez  Canal,  combined  with  the 
increasing  liberality  of  foreign  tariffs  to  continually  j 
supply  new  impetus. 

In  1871  Europe  was  disturbed  politically  by  the 
Franco-Prussian  War,  and  in  1873  commercially  by 
the  payment  to  Germany  of  the  war-indemnity  of 
£20,000,000  ;  this  marked  the  end  of  the  expansion. 

It  is  worth  notice  that  every  event  of  importance 
during  the  century  is  reflected  on  the  trade  diagrams, 
just  as  every  political  disturbance  is  reflected  at  once 
on  the  bourses ;  and,  conversely,  to  each  sudden 
change  corresponds  an  event.  For  instance,  the  most 
marked  depressions  in  the  total  imports  and  exports 
line  up  to  1873  are  in  1805, 1811,  1861,  and  1866,  the 
dates  of  the  battle  of  Trafalgar,  American  War, 
American  Civil  War,  and  Austro-German  War,  and  in 
detailed  ^  figures  of  trade  with  each  country  the  chief 
events  are  equally  marked. 

It  is  proposed  to  deal  with  the  periods  before  1850, 
1850-1870,  and  since  1870,  separately,  in  this  and  the 
following  chapters. 

2.  PRINCIPLES   AND   HISTORY  OF   FREE  TRADE. 

[See  Note  1,  p.  148.] 

No  sketch  of  our  commerce  would  be  complete 
without  at  least  a  short  account  of  the  principles 
and  historical  applications  of  Free  Trade. 

The  principles  which  the  words  "  Free  Trade  "  cover 
are,  very  briefly,  as  follows  : — 

1  Vide.  Diagrams  viii.  and  x. 


42  ENGLAND'S  FOREIGN  TRADE  IN 

1.  The  advantage  of  trade  is  mutual :  in  selling, 
each  party  obtains  something  which  he  prefers  to  his 
own  goods,  and  which  he  cannot  make  easily  for 
himself. 

2.  Exactly  the  same  applies  when  traders  are  of 
different  countries,  under  all  circumstances,  except 
that  transport  is  more  expensive,  the  risk  of  convey- 
ance is  greater,  and  trade  is  less  stable,  being  liable  to 
disturbance  by  war  and  political  events. 

3.  When  goods  can  be  obtained  at  a  cheaper  rate  in 
one  market  than  another,  it  generally  signifies  that 
that  species  of  work  can  be  done  more  efficiently  or 
with  less  labour  in  the  former  locality ;  buying  in 
that  market,  in  preference  to  others,  is,  therefore,  a 
means  of  furthering  a  division  of  labour,  in  which 
every  district  is  engaged  in  the  work  which  is  most 
suited  to  it. 

4.  The  disadvantages,  loss  and  suffering,  which 
attend  every  development  of  trade  that  implies  change 
of  occupation  or  situation,  come  in  just  the  same  way 
whether  the  whole  change  is  accomplished  in  one 
country  or  involves  several.  In  each  case  the 
temporary  misfortune  of  the  few  is  the  price  of  the 
permanent  advantage  of  the  many. 

5.  It  is  not  possible  to  obtain  imports  unless  we 
have  exports  with  which  to  pay  for  them.  Therefore, 
the  internal  trade  of  a  country  can  only  be  altered, 
not  diminished,  by  an  increase  of  foreign  trade. 
Further,  the  more  imports  appear  to  be  crowding  out 
home  goods,  the  greater  our  exports,  or  the  greater  the 
price  paid  for  the  same  quantity. 

6.  Governments  cannot  increase  trade  ;  their  efforts 


THE  NINETEENTH  CENTURY.  43 

to  direct  it  have  generally  been  injurious ;  the  only  | 
active  course  they  can  take  is  to  erect  barriers  j 
between  countries,  which  have  exactly  the  same  evil  I 
effects  that  barriers  between  counties  or  towns  in  the  \ 
same  kingdom  would  have. 

Though  the  principles  and  logic  of  Free  Trade  have 
never  been  logically  refuted,  it  is  regarded  as  at  best 
an  impracticable  theory  by  the  majority  of  nations, 
and  by  parties  in  those  which  have  accepted  it.  For 
Englishmen  to  merely  state  that  all  the  world  are 
fools,  because  they  are  not  convinced  that  the 
universal  application  of  "  Free  Trade "  would  be  an 
undoubted  benefit,  is  merely  insular  conceit  and  pre- 
judice. There  must  be  serious  reasons,  which  arise 
out  of  the  different  situations  of  continental  and 
other  nations,  to  cause  these  adverse  opinions,  besides 
the  immense  quantity  of  fallacies  which  are  put 
forward  sometimes  seriously,  sometimes  speciously, 
by  interested  parties  to  prove  the  inadvisability  of 
having  no  tariffs.  Most  of  these  are  due  to  one 
or  other  of  the  following  ideas. 

It  is  often  thought  that  the  prosperity  of  special ^| 
branches  of  industry  is  essential  to  a  country,  owing  ! 
to  reasons  as  often  social  or  political,  as  economical ;  j 
e.(/.,  agriculture  in  England  at  the  beginning  of  the 
century,   or   manufactures   in   the  United  States  of 
America  now.     This  is  furthered  very  greatly  by  the  , 
fact  that  the  representatives  of  these  industries  are 
generally  the  most  influential  party  in  the  land. 

Again,  it  is  believed  that  protection  will  enable  a 
new  industry,  which  otherwise  would  fail  at  the 
outset,  to  make  a  start  and  take  its  place  as  a  normal 


44  ENGLAND'S  FOREIGN  TRADE  IN 

•  development ;  and  the  only  answer  to  this  is  that,  as 
a  matter  of  fact,  this  has  seldom  or  never  been  the 
case.^ 

It  is  further  held  that  taxes  fall  on  the  foreign 
importers  and  exporters,  that  tariffs  are  useful  as  a 
means  of  forcing  concessions  from  other  countries, 
and  that  recriminatory  duties  are  justifiable  and 
expedient. 

It  would  be  out  of  place  to  discuss  the  case  here,  but 
the  historical  bearing  of  the  century's  contest  over 
this  question  is  of  the  greatest  importance.  The 
gradual  acceptance  or  refusal  of  Free  Trade  in  this 
and  other  countries  has  been  one  of  the  chief 
moulding  forces  both  of  the  quantity  and  nature  of 
international  trade. 

England  is  indebted  to  Adam  Smith  for  her  early 
possession  of  Free  Trade.  His  ideas,  accepted  by 
Pitt  and  other  men  of  note  at  the  end  of  the  last 
century,  were  aided  by  the  peculiar  state  of  our 
manufactures  and  agriculture,  already  indicated,  at 
the  close  of  the  French  War.  The  large  party,  whose 
interests  directly  pointed  to  freedom,  was  continually 
reinforced,  and,  after  a  contest  extending  over  thirty 

"•^  Sometimes  when  an  industry  has  been  thus  fostered  it  has 
been  at  the  expense  of  a  more  profitable  trade.  There  is  great 
difficulty  in  showing  which  of  many  causes  has  had  most  influ- 
ence in  launching  a  new  manufacture.  For  instance,  cotton- 
spinning  in  Bombay  was  assisted  till  1882  by  a  small  tax  on 
imported  manufactures,  which  caused  much  enterprise  in  the 
trade,  and,  to  some  extent,  enabled  it  to  obtain  the  position 
which  it  has  since  held.  But  the  start  would  have  been  made 
in  any  case,  and  this  artificial  aid  was  responsible  for  unsound 
development  and  many  business  failures. 


THE  NINETEENTH  CENTURY.  45 

years,  common  prejudices  and  the  opposition  of  the 
supreme  agricultural  party  were  overcome. 

This  position  once  accepted,  the  feeling  against 
taxes  on  corn  and  on  raw  materials  was  so  strong  that, 
when  Lord  Derby's  government,  in  1852,  proposed  a 
new  corn  law,  their  term  of  office  at  once  ended. 

Triumphant  in  England,  Free  Trade  for  a  short 
time  appeared  to  carry  all  before  it;  in  the  seventh 
decade  of  this  century  commercial  treaties  were  made 
with  the  Continent,  and  a  great  liberation  of  trade 
throughout  the  world  ensued. 

The  first  backward  step  was  taken  by  the  United 
States  of  America  ;  the  North  and  South  War  necessi- 
tated tariffs,  hastily  arranged  to  pay  the  war  expenses. 
A  great  party,  the  Republicans,  became  committed  to 
this  system  of  revenue,  and  special  interests,  corrup- 
tion, and  national  sentiment  combined  to  prevent 
reductions  of  tariff. 

In  Europe  also  it  was  war  that  marked  the  time  of 
reaction,  but  it  was  not  the  necessity  of  taxation  that 
to  any  large  extent  caused  the  change.  Free-trade 
ideas  had  never  been  thoroughly  accepted  on  the 
Continent.  The  distress  of  France  after  the  war  made 
her  the  readier  for  what  we  should  regard  as  quack 
remedies  ;  every  effort  was  made  to  imitate  England's 
industrial  success  by  encouraging  home  manufactures 
as  the  best  way  of  rendering  the  nation  prosperous. 
In  Germany,  the  opposite  cause  produced  the  same 
effect.  The  unnatural  and  spurious  prosperity  which 
followed  the  payment  of  the  French  war  indemnity 
of  £20,000,000  gave  the  start  to  manufacturing  in- 
dustries, which  soon  proved  to  be  on  an  unsound  basis. 


46  ENGLAND'S  FOREIGN  TRADE  IN 

In  the  reaction  that  followed  these  had  to  be  supported 
by  protective  tariffs. 

There  was  a  further  cause  of  a  more  general  nature. 
The  advocates  of  Free  Trade  had  exaggerated  its 
benefits  and  power,  almost  promising  that  a  millen- 
nium of  peace  and  prosperity  would  follow  its  general 
adoption.  Unfortunately,  nearly  every  country  in  the 
world  was  engaged  in  war  some  time  between  1854 
and  1877.  A  great  depression  of  trade,  ruinous  to 
merchants,  began  in  1873,  from  which  the  recovery 
was  very  slow.  The  case  for  Free  Trade  was  recon- 
sidered ;  tariffs  were  again  imposed.  In  America  the 
idea  that  the  States  could  and  should  produce  every- 
thing they  required,  making  an  isolated  world  for 
themselves,  had  great  influence;  and,  generally,  the 
object-lesson  which  England  presented  of  prosperity 
following  manufactures,  induced  other  countries  to 
try  to  imitate  her  special  circumstances  rather  than 
her  general  methods. 

New  countries,  such  as  Australia  and  New  Zealand, 
have  also  this  hankering  after  mines  and  manufactures, 
with  the  idea  that,  started  under  protection,  they  will 
in  their  growth  be  able  to  dispense  with  it. 

Only  Holland,  Belgium,^  and  New  South  Wales  ^ 
agree  with  England  in  full  acceptance  of  Free  Trade. 
For  England  the  peculiar  nature  of  her  trade  renders 
it  a  necessity,  and  there  is  little  fear  of  any  powerful 
reaction  at  home. 

Our  immediate  purpose  is  to  trace  the  battle  and  the 
victory  of  Free  Trade  in  the  middle  of  this  century. 

'  See  p.  151  for  amendment. 

2  Since  Jan.  1,  1901,  merged  with  the  rest  of  Australia. 


THE  NINETEENTH  CENTURY.  47 

3.   ENGLAND'S   ADOPTION   OF   FEEE  TRADE. 

It  was  not  the  theory  of  Free  Trade,  but  the 
practical  need  that  impelled  the  London  and  Edinburgh 
merchants  to  petition,  in  1820,  against  "every  restric- 
tive regulation  of  trade  not  essential  to  the  revenue." 
A  commission  was  appointed  in  response  to  these 
petitions,  and  they  found  that  as  regards  revenue 
there  were  an  infinite  number  of  petty  duties  serving 
no  purpose  but  to  hinder  trade,  and  laid  down  the 
fundamental  principle  that : — "  Commerce  must  be  a 
source  of  reciprocal  amity  between  nations,  and  an 
interchange  of  productions  to  promote  the  industry, 
the  wealth  and  the  happiness  of  mankind,"  and,  "  if 
we  should  be  compelled  to  continue  any  of  the 
present  restrictions  ....  it  will  be  understood  .... 
that  it  is  a  matter  not  of  option,  but  of  necessity,  and 
not  caused  by  any  ideas  on  our  part  of  promoting  our 
own  commercial  interests  by  it."  The  liberality  of 
these  sentences  and  of  the  ensuing  policy,  coming  at 
the  close  of  a  war  which  had  burdened  us  with  a 
debt  greater  than  any  nation  had  previously  borne, 
when  revenue  was  of  the  highest  importance,  and 
any  experiments  therewith  of  the  greatest  risks,  forms 
a  striking  contrast  to  the  action  of  the  Americans  in 
1866,  and  of  the  French  in  1873,  when  similar  cir- 
cumstances induced  them  to  raise  their  tariff  in  order 
to  recoup  their  exchequers. 

This  commission  was  appointed  in  1820.  The  Corn 
Laws  were  not  repealed  till  1846;  for  though  the 
case  had  been  thus  clearly  stated,  and  the  opinion  of 


48  ENGLAND'S  FOREIGN  TRADE  IN 

experts  given,  tbe  confusion  of  the  country  after  the 
war  and  the  one-sided  views  that  distress  generates 
clouded  the  issue ;  different  claims  were  raised  by 
classes  with  conflicting  interests,  and  amid  the 
uproar  the  old-established  monopolies  only  yielded 
their  ground  step  by  step. 

Newmarch's  description  of  our  fiscal  system  in 
1820  is  as  follows : — "  At  that  time  the  system  of 
prohibition,  protection  and  fiscal  confusion  was  at  its 
height.  It  was  said  by  competent  authorities  that 
the  number  of  Acts  of  Parliament  relating  to  the 
entry,  export  and  custody  of  goods  as  matters  of 
Custom  House  supervision,  was  not  less  than  fifteen 
hundred.  All  the  special  interests  were  in  full  posses- 
sion of  the  vested  rights  to  which  they  laid  claim. 
There  was  the  Corn  Law  of  1815;^  there  were  the 
differential  duties  in  favour  of  the  West  India  pro- 
prietors ;  the  monopoly  of  the  East  India  Company  ; 
the  rigorous  application  of  the  navigation  laws  against 
competition  on  freights.  There  were  heavy  duties 
on  raw  materials  of  industry,  and  prohibitive  or 
extravagant  duties  on  foreign  manufactures." 
/  Mr.  Huskisson,  in  spite  of  opposition,  made  the  first 
inroad  on  this  system  while  President  of  the  Board 
of  Trade  from  1823  to  1827,^  during  which  four 
years  our  imports  increased  26  per  cent.,  the  tariflF  on 
raw  silk  was  reduced  from  5s,  7Jd.  to  Id.,  on  raw 
wool  from  6d.  to  Id.,  on  manufactured  from  50  to  15 
per  cent,  and  the  prohibition  on  silk  manufactures  was 

^  Prohibiting  the  importation  of  wheat  when  the  price  was 
under  80s.,  and  rendering  it  free  when  above  80s. 

-  See  Leone  Levi's  "History  of  British  Commerce,''  pp.  172-3. 


THE  NINETEENTH  CENTURY.  49 

changed  to  a  duty  of  30  per  cent. ;  other  similar  . 
reductions  were  made,  and  the  commercial  union  of  \ 
Great  Britain  and  Ireland  was  completed.  / 

After  this  there  was  a  pause  in  fiscal  legislation  for 
twelve  years,  during  which  our  imports  increased 
50  per  cent,  and  our  exports  40  per  cent,  (real  value), 
the  increment  made  in  Mr.  Huskisson's  Presidency 
being  thus  maintained. 

Then  came  the  second  period  of  reform,  Mr.  Peel's 
administration,  culminating  in  the  repeal  of  the  Corn 
Laws. 

In  1840,  a  committee,  known  as  "Hume's  com- 
mittee," had  reported  that  "  The  tariff  of  the  United 
Kingdom  presents  neither  congruity  nor  unity  of 
purpose ;  it  often  aims  at  incompatible  ends.  The  duties 
are  sometimes  meant  to  be  both  productive  of  revenue 
and  for  protection.  Whilst  the  tariff  has  been  made 
subordinate  to  many  small  -  producing  interests  at 
home  by  the  sacrifice  of  revenue,  in  order  to  support 
their  interests,  the  same  principle  of  interference  is 
largely  applied  by  the  various  discriminating  duties 
to  the  produce  of  our  colonies,  by  which  exclusive 
advantages  are  given  to  the  colonial  interests  at  the 
expense  of  the  mother  country."  In  1842  there  were  ^ 
1,090  articles  charged  with  duties,  many  of  them  j 
barely  repaying  the  costs  of  collection. 

Yilliers  v/as  the  first  parliamentary  champion  of 
the  attack  on  the  Corn  Laws.  Every  year  from  1838 
onwards  he  moved  against  an  overwhelming  majority 
a  resolution  for  their  revision.  At  about  the  same 
time  Hichard  Cobden,  soon  to  be  joined  by  John 
Bright,   gave   his   attention   to   the   subject,  and   in 


50  ENGLAND'S  FOREIGN  TRADE  IN 

18S9    the   Anti-corn-law   League^  was   initiated    at 
Manchester. 

The  report  of  Hume's  committee  was  taken  as  their 
text-book.      The  press  issued   a   continuous   flow  of 
pamphlets  which  were  energetically  distributed.     All 
over  the  country  the  discussion  was  carried  on  with 
the  greatest  vigour.     Public  meetings  were  held  in 
every  county  in  the  teeth  of  the  fiercest  opposition, 
but  the  League  was  enthusiastically  welcomed,  and, 
more  than  once,  an  audience,  hostile  at  the  commence- 
ment of   the  meeting,  were  almost  unanimously  in 
favour  of  the  resolutions  at  the  end. 
/     In  1842  and  ]84<5,  Peel  made  great  reductions  in 
'  duties,  especiall}^  on  raw  materials,  most  of   which 
j  were  allowed  to  be  imported  free.      The  export  of 
machinery    was    at    last    recognised,    and    foreign 
manufactures  admitted  at  reduced  duties. 

Between  1840  and  1847,  imports  increased  34  per 
'  cent,  and  exports  44  per  cent,  in  value,  while  in  spite 
'  of  these  immense  remissions  of  duties  the  increasing 
trade  kept  excise  and  customs  at  their  old  level. 

The  Protectionist  party,  beaten  in  argument,  and 
confuted  by  the  reviving  prosperity  of  the  country, 
gave  all  their  strength  to  the  defence  of  the  Corn 
Laws,  but  the  time  had  at  last  come  for  their  repeal. 
With  the  object-lesson  of  bad  harvests  and  high 
prices  before  them,  the  people  at  large  were  deter- 
mined to  have  cheap  corn.  Peel  himself  was  con- 
vinced by  the  facts,  and,  though  he  was  returned  in 
1842  with  a  majority  of  91  pledged  to  defend  the 
Corn  Laws,  the  majority  diminished,  the  Government 
■■  At  first  called  the  Anti-corn-law  Association. 


THE  NINETEENTH  CENTURY.  51 

resigned  in  1845,  and  Peel  came  back  pledged  for 
their  repeal.  The  League  had  won  ;  all  its  prominent 
members  were  seated  in  the  House,  and  the  Corn 
Laws  were  abolished  by  a  majority  of  97. 

The  same  Parliament  introduced  further  reforms 
in  tariff.     Amongst   these   the   sugar   question   was 
attacked :  differential  duties  had  been  levied  on  im- 
ported sugar,  the  West  Indies  were  favoured  more 
than  the   East   Indies,   and   both   more   than   other 
countries,  so  that  the  duties  on  sugar  from  these  three 
sources  were  respectively  14s.,  17s.  6d.,  21s.  6d.,  for 
the  same  quantity ;    but   in   1848   the   duties   were 
equalised.     Our  carrying  trade  was  thrown  open  to  N 
all  nations  by  the  repeal  of  the  Navigation  Laws  in  ' 
1849.     The  finishing  touches  to  the  perfection  of  our  | 
Free  Trade  system  were  put  by  Mr.  Gladstone  in  j 
1852,  since  which  time  duties  have  only  been  levied,  ' 
purely  for  purposes  of  revenue,  on  some  dozen  articles 
which  cannot  be  produced  at  home.^ 

4.  THE  IMMEDIATE  EFFECTS  OF  FEEE  TRADE. 

Turning  from  the  method  in  which  these  reforms 
were  effected,  let  us  trace  their  results  on  the  wealth 
of  the  people. 

In  the  first  place,  there  is  no  reason  to  suppose  that  "nj 
wages  or  incomes  as  a  whole  rose  or  fell  to  any  great 
extent  between  1815  and  1850  ;  but  prices,  and  there- 
fore the  purchasing  power  of  money,  varied  greatly,  j 

1  A  small  duty  remained  till  1849.  From  1849  to  1869  a 
so-called  registration  duty  of  Is.  a  quarter  was  imposed  on  all 
grain,  and  a  similar  duty  existed  in  1902-3. 


52  ENGLAND'S  FOREIGN  TRADE  IN 

From  1820  - 1835  prices  were  considerably  lower 
than  during  the  war ;  owing  to  favourable  seasons  at 
home,  to  improvements  in  manufacture  and  scientific 
agriculture,  to  a  low  rate  of  interest,  to  the  relief  from 
the  dangers  of  exporting  and  importing  goods  in  open 
warfare,  and  to  Mr.  Huskisson's  reductions  of  duty.^ 
Prices  ranged  a  little  higher  in  the  next  few  years, 
but  began  to  fall  steadily  in  1841.  The  evidence 
which  the  index  number  affords  is  very  striking. 
The  date  of  Peel's  first  reforms  is  the  date  of  the  com- 
mencement of  the  fall,  and  as  in  successive  j^ears  trade 
after  trade  was  liberated,  prices  decreased  regularly 
till  1851,  after  the  influx  of  Australian  and  Calif ornian 
gold  was  felt. 

The  index  number  changes  from  103  in  1840  to  75 
in  1851  :  i.e.,  £75  in  1851  went  as  far  as  £103 
in  1840,  whilst  incomes  and  wages  had  slightly 
increased. 

The  prices  of  certain  imports  (duties  deducted)  at 
those  dates  are  : — 


Years.  Wheat.  Coffee.  Years.  Tea. 

1840  £3  6s.  4d.  per  quarter  84s.  per  cwt.    1839    Is.  7d.  per  lb. 
1850  £2  Os.  3d.  „  36s.         „         1851    Is.  Id.      „ 


Years.  Sugar.  Butter  (Irish).  Eaw  Silk. 

1840    40s.  Od.  per  cwt.  90s.  per  cwt.  18s.  per  lb. 

1850     24s.  6d.       ,,  70s.       „  16s.      „ 


Years.     Cotton  Wool.  Merino  Wool. 

1840    5d.  per  lb.  2s.  Id.  per  lb. 

1850    5id.     „  Is.  5d.      „ 

1  Vide,  Tooke's  " History  of  Prices." 


THE  NINETEENTH  CENTURY.  53 

In  1885,  when  the  index  number  is  nearly  the  same 
as  in  1850,  prices  were : — 

Wheat.  CoflFee.       Tea.  Sugar,  Silk.        Cotton.    Wool. 

£1  12s.  lOd.     61s.    Is.  2(L    14s.  per  cwt.     14s.         5d.      lOd. 

It  is  important  to  notice  exactly  how  this  reduction  ^ 
was  brought  about  in  this  period  when  no  other 
country  was  free-trading,  and  we  were  the  world's 
manufacturers.  Duties  on  imports  and  exports  were 
removed;  the  reduction  of  price  made  a  greater 
demand  at  home  for  imports,  and  abroad  for  exports. 
The  output  of  the  factories  was  therefore  increased, 
methods  were  improved,  economies  due  to  work  on  a 
large  scale  adopted ;  we  had  a  monopoly  abroad,  and 
the  same  labour  more  efficiently  applied  producing  a 
larger  output,  more  foreign  goods  were  obtained  in 
return. 

At  the  same  time,  while  in  1830-1840  5  per  cent, 
of  the  population  were  fed  on  foreign  corn,  in  1840- 
1850  the  percentage  was  12  per  cent.  Hence  a 
smaller  proportion  of  labourers  were  employed  on  the 
unproductive  work  of  cultivating  inferior  soil.  The 
price  of  wheat  fell  40  per  cent ;  it  could  not  possibly 
pay  to  continue  the  ploughing  of  steep  hills,  stiff  clay 
or  stony  ground.  The  labour  formerly  so  employed 
had  to  seek  new  work ;  the  diminution  (relative  and 
actual)  of  the  population  of  the  agricultural  counties, 
and  the  increase  in  the  northern,  show  how  this  labour 
was  used.  Railways  were  constructed,  factories  and 
workshops  built,  and  machinery  set  up ;  that  is, 
surplus  labour  was  invested  in  fixed  capital  which 
would  bring  profit  in  the  next  decade.     And  while 


\ 


54  ENGLAND'S  FOREIGN  TRADE  IN 

thus  increasing  our  capital,  and  laying  the  founda- 
tions of  new  work,  the  factory  "  hands "  in  the 
north,  and  the  miners  and  iron-workers,  were  with 
the  product  of  comparatively  little  labour  buying 
food  for  the  whole  of  England,  the  result  of  long 
tedious  toil  of  peasants  on  the  Continent,  and  colonists 

'.  in  new  countries,  who  thought  themselves  well  paid 

i^by  our  manufactures. 


THE  NINETEENTH  CENTURY.  55 


IV.— SUCCESS  OF  FREE  TRADE,  1850-1870. 

1.   UNLIMITED   EXPANSION. 

The  almost  unlimited  expansion  which  becomes^ 
marked  about  1850  and  culminates  in  1873  has  been  ' 
pointed  to  by  many  different  people  as  proof  of  the 
great  effect  of  different  measures  or  inventions ;  as  a 
matter  of  fact,  it  was  due  to  no  one  cause,  but  was 
rather  the  result  of  multitudinous  discoveries  and 
events,  acting  and  reacting  on  each  other.  Perhaps 
the  following  list  of  dates  ^  shows  this  most  clearly : — 


Opening  of  first  English  railway,    ... 

..     1830 

Wheatstone's  telegraph,        

..     1837 

First  ocean  steamer, 

..     1838 

Settlement  in  New  Zealand, 

..     1840 

Reduction  of  duties  on  raw  materials. 

..     1842 

Repeal  of  Corn  Laws,            

...     1846 

Commercial  treaty  with  France,      . . . 

...     1860 

Here  are  seven  events  of  widel}'  different  natures, 
each  of  which  must  have  had  its  effect  in  the  period 
under  consideration,  and  it  would  be  useless,  even  if 
it  were  possible,  to  weigh  the  separate  result  of  each. 
We  cannot  estimate,  we  can  obtain  no  criterion  of 
the  vast  effects  of  the  adoption  of  Free  Trade.  Three 
things,  however,  are  clear:  —  First,  that  till  the 
1  For  completer  list,  vicZe  pp.  ix.  x. 


56  ENGLAND'S  FOREIGN  TRADE  IN 

suffocating  restrictions  were  removed,  trade  could  not 
expand ;  when  exports  were  prohibited,  imports  could 
not  be  plentiful ;  when  imports  were  taxed,  the  demand 
at  enhanced  prices  could  not  be  great.  Secondly,  if 
every  restriction  was  removed  from  every  branch  of 
trade,  there  would  be  no  increase  without  natural 
causes  of  manufacture  and  demand,  no  increased  de- 
mand without  a  cheapening  or  improvement  of  supply; 
that,  in  fact.  Free  Trade  is  the  method,  not  the 
source,  of  commerce,  and  that  the  claim  of  this 
increase  as  the  direct  result  of  freedom  and  a  proof  of 
its  expediency  is  an  inaccurate  exaggeration.  Thirdly, 
that  the  date  of  the  marked  commencement  of  the 
expansion  coincides  exactly  with  the  reductions  and 
abolitions  of  duties,^  pointing  to  the  fact,  borne  out 
by  all  concurrent  events,  that  the  adoption  of  Free 
Trade  was  the  opening  of  the  valve  which  allowed 
1  the  forces  of  commerce  full  play. 

Let   us    consider    of    what    nature    these    forces 
were. 
/      The  underlying  cause,  without  which  the   others 
'  would  have  been  futile,  was  the  great  increase  of 
human  efficiency  (i.e.,  of  the  quantity  of  useful  goods 
:  which  the  same  effort  could  produce)  owing  to  the 
;  use   of    machinery,   and   the   general   adaptation   of 
\  science  to  production.     "  Men  are  multiplied  a  hun- 
dred and  a  thousandfold,"  ^  as  William  Morris  puts  it, 
and  thus  more  wealth  is  produced,  more  has  to  be 

■^  The  financial  reforms  were  from  1842-1852.  In  Diagrams 
i.  and  iv.,  the  slope  of  the  upper  curve,  which  shows  the  rate 
of  increase,  becomes  steeper  from  1842-1852. 

2  "  Dream  of  John  Ball." 


I7co.ooa 


DIAGRAM  IF,    ^ 

showing  expansion  of  tmde ,    1830  -  /S73. 


Value  of  Imparls  t  Exports  wqether    Z.EKports{inCludinore  e/ports) 
B  imports,  [change  //?  mel/iod  of  voluaiion  m  185^  ] 


■^600.000.000. 


400.000,000 


300.000.000 


.200.000,000 


100. 000. 000 


1830  1840  1850  I860 


1870 


THE  NINETEENTH  CENTURY,  57 

distributed,  and  as  each  trade  increases  its  output,  it 
is  necessary  to  find  a  wider  area  of  customers. 

Again,  the  very  nature  of  this  change  caused^ 
specialisation ;  each  man  worked  at  one  detail  of  his 
trade,  each  town  and  district  became  the  home  of 
special  manufactures,  and  the  next  step  was  that  the 
work  of  each  country  was  specialised.  It  is  true  that 
at  the  period  of  which  we  are  speaking,  these  special 
trades  were  new  discoveries  of  the  land  which  made 
them  its  own,  and  the  old  industries  went  on  as  before  ; 
but  it  was  in  the  trades  of  comparatively  recent  estab- 
lishment, in  England  especially,  that  there  were 
immense  outputs  (of  cotton  goods  and  machinery,  for 
instance),  in  great  excess  of  the  home  demand  ;  and 
this  could  only  pay  if  the  foreign  demand  grew  in 
proportion  to  the  growing  efficiency ;  that  is  to  say, 
our  newer  industries  became  the  more  important,  and 
were  marked  as  our  division  of  international  labour. 

The  foreign  demand,  indeed,  for  our  manufactures 
and  our  machines  was  extraordinary.  Now,  every 
country  is  trying  to  rival  our  goods,  and  each  to 
produce  for  herself  the  manufactures  she  requires  ; 
then,  rivalry  was  out  of  the  question. 

During  the  war,  in  spite  of  all  restrictions,  and  of 
penal  laws  in  force  even  against  possessors  of  British 
goods,  we  had  found  a  large  market  on  the  Continent. 
In  the  first  quarter  of  the  century  evidence  was  given 
to  a  Parliamentary  Commission  ^  of  the  powerlessness 
of  the  Customs  House  to  stop  the  exportation  of 
machinery,  and  of  artisans  to  set  it  up.  The  exporta- 
tion being  prohibited,  parts  of  machines  were  packed 
1  Select  Committee  on  Artisans  and  Machinery,  1824. 


58  ENGLAND'S  FOREIGN  TRADE  IN 

separately,  or  different  machines  mixed  together  so 
that  it  was  impossible  to  identify  them,  or  a  forbidden 
press  would  be  exported  among  old  iron.  The  demand 
was  such  that  every  risk  was  well  rewarded. 
/  At  the  date  we  have  reached,  England  was  especi- 
ally to  the  fore  in  railway  construction.  £150,000,000 
were  invested  in  English  railways  between  1846  and 
1850,  the  money  coming  from  the  middle  classes  ^ 
without  disorganising  the  trade  of  the  country,  or 
hindering  our  progress  in  other  directions.  Our  rail- 
ways were  immediately  the  envy  of  the  Continent. 
Engineers,  navvies,  and  steel  were  sent  abroad  en 
masse.  For  instance,  in  1842  Mr.  Brassey  took  a 
colony  of  4,000  navvies  to  build  the  railway  from 
Paris  to  Rouen,  and  these  gave  the  French  labourers 
their  first  lesson  in  railway  construction.  Man  for 
man,  the  English  earned  twice  as  much  as  the 
French  ;  but  after  a  time  on  other  railways  the  French 
were  found  the  more  skilful  in  certain  parts  of  the 
work,  while  the  dangerous  and  hard  work  continued 
to  require  English  hardihood.  At  later  dates  labourers 
were  also  exported  (in  many  ways  the  effect  on 
trade  being  the  same  as  from  the  exportation  of 
goods)  to  construct  the  Grand  Trunk  Railway  in 
Canada  and  a  line  in  New  South  Wales. 

In  1845,  Belgium,  Germany  and  France   had   to- 
gether   7,000    miles,   and   the   United   States   9,000 
miles  of  railway  laid  down  or  projected. 
''      The  end  of  this   period,  viz.,  the   years  1868-72, 
shows  another  great  increase  in  railways,  definitely 
>   marked,  too,  in  the  increase  of  iron,  steel,  machinery 
■»  Tooke's  "History  of  Prices." 


THE  NINETEENTH  CENTURY.  59 

and    other    goods,    which    at    that    date    we    were  ; 
exporting  as  capital  on  loan  to  foreign  countries. 

Railways  were  thus  extended  all  over  the  world. 
Many  of  the  undertakings  and  investments  were 
speculative  and  rash.  In  England,  in  1849,  the  capital 
invested  had  depreciated  to  half  the  value  of  the 
actual  money  paid.  Yet  though  the  investors  did  not 
reap  the  full  reward,  the  railways  were  there,  and 
soon  brought  their  natural  benefits  to  the  world  at 
large. 

On  every  side  new  markets  were  opened ;  old  ^ 
trades  were  increased,  new  developed.  The  railways 
built  with  our  materials  opened  up  districts  hitherto 
inaccessible  ;  this  acted  as  a  fresh  stimulus  to  our 
manufacturers — more  capital  was  forthcoming,  and 
more  railways  were  built. 

Not  only  were  countries,  with  which  we  had  already 
established  some  trade,  brought  nearer  and  in  closer 
relation,  but  new  countries  were  discovered.  Aus- 
tralia and  New  Zealand  were  ready  to  take  our 
surplus  population,  and  were  not  behindhand  in  the 
new  system  of  development.  Our  older  colonies  also 
increased.  With  each  emigration  the  number  of  our 
customers  abroad  was  multiplied. 

In  1850  and  1852  this  process  was  accelerated  by 
the  news  of  the  gold  discoveries  in  California  and 
Australia.  So  great  was  the  emigration  and  the  con- 
sequent demand  for  ships  that  all  freights  were  in- 
creased, and,  with  a  short  lull,  this  continued  till  1856. 
Immense  quantities  of  manufactures  went  to  pay  for 
the  influx  of  gold,  and  a  great  impulse  was  given  to 
the  shipbuilding  trade. 


6o  ENGLAND'S  FOREIGN  TRADE  IN 


^or  1831 

16,400,000 

„  1841 

18,600,000 

„  1851 

20,900,000 

„  1861 

23,300,000 

„  1871   . 

26,200,000 

Meanwhile  population  was  increasing  with  great 
rapidit}^     The  census  returns  show — 


•in  Endand  and  Wales. 


( These  numbers  could  not  have  been  supported  in 
England  before  these  developments,  and  the  fact  that 
they  were  living  in  greater  comfort  than  their  fathers 
is  proof  at  once  of  the  magnitude  and  the  advantages 
of  our  foreign  trade. 

The  last  great  impetus  was  given  by  the  Suez 
Canal,  by  which  the  journey  to  India  and  the  East 
was  quickened  by  one-half,  and,  at  the  same  time, 
rendered  more  secure.  Its  great  effect  in  modifying 
the  courses  of  trade — an  effect  particularly  felt  in 
England — will  be  considered  in  another  place.^  In  the 
present  connection  we  notice  that  just  as  railways 
rendered  profitable  the  exchange  of  commodities  that 
hitherto  distance  had  rendered  almost  inconceivable, 
and  had  also  stimulated  all  other  trades  in  which  the 
item  of  distance  was  considerable,  so  the  Canal  made 
India  and  Europe  neighbours,  who  could  serve  each 
other  to  great  advantage. 

It  must  suffice  to  mention  the  telegraph,  with  its 
later  rival,  the  telephone,  as  serving  the  same  ends ; 
by  diminishing  the  time  necessary  to  complete  an 
exchange,  they  have  great  effect  in  curtailing  the 
supply  that  must  be  kept  in  stock  to  provide  for 
1  Vid^  p.  71. 


THE  NINETEENTH  CENTURY.  6i 

a  continued  demand,  with  the  consequent  release 
of  capital,  and  the  partial  displacement  of  the 
"  middle-man." 

While  Free  Trade  between  nations  was  allowing 
these  inventions  and  enterprises  their  natural  swing, 
the  concurrent  development  of  free  competition  at 
home  was  stimulating  our  manufacturers  to  use  to 
the  full  every  means  of  saving  labour,  increasing 
output  and  diminishing  cost. 

Everything   went   to   show   that    the    same   laws 
govern  internal  and  international  trade ;    there  was 
every  promise  of  a  long  era  of  increasing  freedom  and  J 
increasing  prosperit}^ 

2.    TREATIES   WITH   FOREIGN   COUNTRIES. 


While  Mr.  Gladstone  was  completing  Peel's  reforms 
at  home,  Cobden  was  travelling  in  Europe,  making  an 
almost  royal  progress.  Educated  continental  opinion 
was  waking  to  the  fact  that  the  system  of  trade  then 
in  vogue  was  neither  logical  nor  successful.  When 
all  dogmas  were  challenged  at  the  time  of  the  revolu- 
tions of  1848,  the  economic  dogmas  received  their 
share  of  criticism.  The  campaign  in  England,  then  as 
now  connected  with  the  name  of  Cobden,  was  watched 
with  interest ;  and  when  the  hero  of  the  fight  crossed 
to  Europe,  in  each  country  he  was  received  by  the 
men  of  most  original  or  advanced  opinions  with 
enthusiasm.  In  Italy,  Prussia,  France  and  Russia,  he 
was  closeted  with  emperors,  kings  or  statesmen,  to 
whom  he  expounded  the  new  theory  of  trade.  His^. 
personality,  as  well  as  his  logic,  always  obtained  for  i 


62  ENGLAND'S  FOREIGN  TRADE  IN 

him  a  sympathetic  audience,  and  it  was  entirel}'  by 
his  personal  influence  that  the  celebrated  commercial 
treaty  between  England  and  France  was  arranged. 

In  accepting  Free  Trade,  England  had  not  antici- 
pated that  Europe  would  follow  her  example.  In  his 
speech  in  1844,  Peel  had  said :  "  I  have  no  guarantee 
that  other  countries  will  immediately  follow  our 
example — it  is  a  fact  that  other  countries  have  not 
followed  our  example,  and  have  levied  higher  duties 
in  some  cases  on  our  goods  ....  I  rely  on  that  fact 
as  a  conclusive  proof  of  the  policy  of  the  course 
we  are  pursuing^  ....  But  depend  upon  it,  your 
example  will  ultimately  prevail.  When  your  example 
could  be  quoted  in  favour  of  restriction  it  was  quoted 
largely.  When  your  example  can  be  quoted  in 
favour  of  relaxation  ....  reason  and  common  sense 
will  induce  relaxation  of  high  duties." 

Nevertheless,  by  accidental  circumstances,  political 
convenience  or  a  partial  acceptance  of  the  logic  of 
trade,  considerable  progress  had  been  made  before 
Cobden's  treaty.  Sardinia,  Switzerland,  Holland  and 
Portugal  had  become  free-traders  before  1854. 
Austria,  Prussia  and  neighbouring  States  had  ar- 
ranged a  common  tariff  by  mutual  concessions.  The 
Zollverein,  Austria,  Belgium,  Spain,  Russia,  Denmark 
and  Sweden,  had  reduced  their  tariffs  for  political 
reasons. 

Then  the  great  impetus  was  given  by  the  treaty 
between   England   and   France;    and  between  1859 

1  In  another  sentence  he  explains  that  it  is  hopeless  to  wait 
till  concessions  can  be  obtained,  and  that  England  must  have 
freedom  of  trade,  alone  in  opposition  to  the  world,  or  not  at  all. 


THE  NINETEENTH  CENTURY.  63 


and  1865  treaties  were  concluded  with  Belgium, 
Germany,^  Russia,  Sweden  and  Norway,  Italy  and 
Austria,  while  many  of  these  countries  also  made 
treaties  with  each  other.  In  most  cases  there  was  a 
"  most  favoured  nation "  clause  by  which  we  were 
entitled  to  every  reduction  made  or  advantage 
granted  to  any  other  nation.  For  instance,  France 
could  not,  under  the  terms  of  the  treaty,  admit 
German  manufactures  on  more  favourable  terms  than 
ours.^ 

Great  as  was  the  advance  which  these  treaties  indi-^, 
cated,  they  were  only  the  first  step  in  the  direction  ' 
of  Free  Trade,  and  the  second  step  still  remains  to 
be  taken  ;  for  duties  were  not  abolished,  except  in 
rare  cases ;  our  goods  were  admitted,  but  under  a 
maximum  tariff  of  30  per  cent.,  while  foreign  goods 
were  allowed  free  entry  to  England. 

Naturally,  our  trade  with  these  countries  increased 
greatly.  In  the  years  1860  and  1870,  our  imports  and 
exports  from  and  to  the  following  countries  were — 

France.  Germany,  Holland  and  Belgium. 

Imports.  Exports.  Imports.  Exports. 

1860     £18  million     £5  million  £40  million     £20  million 

1870       38      „  12     „  45      „  37      „ 

Our  total  imports  and  exports  increased  50  per  cent." 
in  the  ten  years,  while   international   trade   on   the 
Continent  increased  to  an   almost   fabulous   extent ; 

1  The  ZoUverein. 

2  "  Each  of  the  two  high  contracting  powers  engages  to  confer 
on  the  other  any  favour,  privilege,  or  reduction  in  the  tariff  of 
duties  of  importation  on  the  articles  mentioned  in  the  present 
treaty  which  the  said  power  may  concede  to  any  third  power," 


64  ENGLAND'S  FOREIGN  TRADE  IN 

that  of  the  countries  which  were  benefiting  by  the 
system  of  treaties  (which  gave  at  once  to  all  each 
advantage  granted  to  any)  was  doubled.  Enterprise 
and  general  vigour  and  prosperity  followed  all  over 
Europe,  and  the  general  causes  which  were  increasing 
efficiency  in  work  and  intimacy  in  trade  brought  the 
commerce   of    non  -  free  -  trading    countries    also    to 

i  two-thirds  as  much  again  as  in  1860. 

/  There  was  no  general  change  in  prices  at  this 
period,  but  the  prosperity  of  trade  was  shown  by 
rising  wages. 

Between  1860  and  1870  wages  rose  on  an  average 
about  12  per  cent.,  and  the  income  of  the  nation  per 
head  of  the  population  25  per  cent.  All  classes  appear 
to  have  received  some  benefit.  It  is  estimated  that 
wages  in  agriculture  rose  7  per  cent.,  in  Scotch  mining 
about  the  same,  in  the  Building  Trades  16  per  cent.,  in 
Engineering  10  per  cent.,  in  Iron  and  Steel  manufac- 
ture 27  per  cent.,  and  in  Cotton  factories  25  per  cent. 

/      As  before,  we  cannot  distinguish  which  were  the 

.  causes  and  which  the  results  of  this  improvement,  but 
our  home  trade  could  not  have  increased  without  the 
enlarged  markets  open  to  us,  nor  would  these  have 
been  opened  except  by  the  more  liberal  views  which 
produced  international  treaties  of  commerce  and 
peace. 

3.   AMERICAN  WAR  AND  ITS  EFFECTS — TRADE  WITH  THE 
UNITED  STATES   AND   INDIA. 

A  glance  at  the  import  figures  of  the  years  1850- 
1870  shows  that  some  great  disorganisation  of  trade 


THE  NINETEENTH  CENTURY. 


65 


took  place  between  1860  and  1868  ;  and  the  details 
show  that  the  fluctuations  were  in  the  cotton  in- 
dustry, and  relate  to  the  United  States  and  to 
India.^ 

The  war  between  the  Northern  and  Southern  States, 
in  1861-5,  had  very  striking  and  far-reaching  effects 
on  trade  in  many  directions.  During  that  time  inter-  ^ 
course  with  the  States  was  suspended,  and  the  result 
showed  at  once  the  importance  to  England  of  the 
cotton  trade,  the  closeness  of  our  relations  with  the 
States,  and,  further,  that  the  market  for  corn  had 
become  so  wide  that  the  effect  on  prices  of  a  war  in 
the  country  of  our  greatest  supply  was  very  slight. 

Our  cotton  imports  in  the  years  1860-1870  were — 


Year. 

Weight.               Value 

J. 

1860 

14^ 

£35- 

1861 

12 

40 

1862 

4 

30 

1863 

7 

55 

1864 

9 

75 

1865 

10 

■00,000,000  lbs.    65 

■millions 

1866 

14 

70 

1867 

13 

50 

1868 

13 

55 

1869 

20 

57 

1870 

13, 

52J 

Thus  our  snpjply  was  greatly  diminished  in  1860 
to  1864,  while  the  'price  increased  immensely.  The 
suffering  in  Manchester  caused  by  this  cotton  famine 
is  well  known,  as  also  are  the  exciting  tales  of  blockade- 
running,  by  which  some  small  quantities  of  cotton 
^  Vide  Diagrams  iv.,  vii.,  x. 


66 


ENGLAND'S  FOREIGN  TRADE  IN 


were  obtained,  and  the  Americans  supplied  at  fabulous 
prices  with  our  goods. 

During  these  years  the  values  of  our  imports  of  all 
kinds  from  India  and  the  Levant  (including  Egypt, 
Turkey,  etc.),  were — 


Year. 

In 

dia. 

Levant. 

1860 

£18  millions 

£15  milli( 

1861 

25 

ii 

15        „ 

1862 

•     38 

?) 

15        „ 

1863 

53 

)» 

20       „ 

1864 

55 

)) 

25        „ 

1865 

43 

35 

28        „ 

1866 

40 

}) 

22        „ 

1867 

30 

» 

20       „ 

1868 

35 

55 

25        „ 

1869 

40 

51 

27       „ 

1870 

30 

55 

22        „ 

These  figures  show  clearly  the  development  of  new 
cotton  fields,  which  sprang  up  as  if  by  magic  in  re- 
sponse to  the  demand.  Before  the  war  was  over,  and 
long  before  America  had  recovered  from  the  strain, 
India  and  Egypt  had  grown  and  sent  to  us  a  new 
crop,  which,  in  1865,  nearly  reached  the  former 
normal  supply.  The  influences  of  high  prices  and 
ready  enterprise  eftected  this  unprecedented  growth 
of  a  new  trade.  The  elasticity  and  adaptability  of 
the  world's  labour,  which  rapid  communication  and 
increasing  intercourse  had  rendered  possible,  has  never 
been  so  well  shown  as  at  this  time. 

We  also  see  the  evils  which  the  same  causes  may 
bring  in  their  train. 

Owing  to  our  dependence  on  the  people  of  another 


THE  NINETEENTH  CENTURY,  67 

continent,  an  unexpected  rebellion,  a  new  political  i 
party  or  a  change  in  fiscal  laws  over  which  we  have 
no  possible  control,  may  paralyse  our  trade,  throw  j 
thousands  of  hands  out  of  work,  and  have  an  effect  : 
which  may  almost  be  compared  with  that  caused  in 
the  old  times  of  non-intercourse  by  an  insufficient  \ 
harvest. 

Moreover,  sudden  fluctuations  of  this  nature  give\ 
rise  to  speculative  purchases,  which  may  ruin  or 
make  the  fortune  of  a  merchant  as  chance  decides, 
and  to  the  initiation  or  increase  of  new  sources  and 
methods  of  making  up  the  old  supply,  which  on  the 
return  of  normal  trade  will  be  found  to  have  no  solid 
basis,  will  have  to  be  relinquished  at  a  loss,  and  cause 
further  disturbances.  Thus,  in  the  present  instance,  ' 
though  cotton  growth,  having  been  developed  in  such 
abnormal  conditions  in  India,  has  proved  a  stable  and 
profitable  trade,  the  profits  to  be  made  from  this 
investment  were  so  much  exaggerated  that  several 
companies  over  -  committed  themselves  and  in  the 
reaction  failed  ;  the  "Glasgow  Bank  "  failed  in  1878 
from  this  cause,  ten  years  after  the  events,  and  by  so 
doing  aggravated  a  further  commercial  crisis. 

These,  however,  are  the  evils  of  the  growth  of  ^ 
foreign  trade,  not  of  its  perfect  development,  and 
they  carry  their  remedy  with  them.  The  supply  of 
cotton  is  now  so  wide  that  disturbances  must  occur 
in  the  same  year  in  both  hemispheres  to  produce  any 
very  great  effect.     [See  Note  4,  p.  151.] 

The  effects  of  the  war  on  American  finance  were 
most  disastrous  from  the  Free  Trade  point  of  view.  ' 

There  had  been  a  reaction  from  the  high  tariff  of 


68  ENGLAND'S  FOREIGN  TRADE  IN 

1830  already  mentioned.  The  Southern  States  then, 
as  now,  agricultural,  while  the  Northern  were  partly 
manufacturing,  opposed  the  tariff,  and  a  successive 
reduction  to  be  completed  in  1842  was  arranged. 
During  this  time  (1829  to  1836)  our  exports  increased 
from  five  to  twelve  millions ;  another  severe  depres- 
sion (in  England  as  well  as  America),  however, 
enabled  the  protectionists  to  return  to  the  tariff  of 
1832. 

In  1846,  Secretary  Walker's  scheme  reduced  duties 
to  an  average  of  25  per  cent.,  and  another  substantial 
/  reduction  followed  in  1857.  Just  before  the  war  the 
duties  were  only  14  per  cent,  on  total  imports,  the 
average  for  the  past  twenty  years  having  been  about 
20  per  cent.  But  between  1861  and  1863  tariffs  were 
altogether  doubled,  recklessly,  to  meet  war  expenses, 
and  further  increased  to  a  maximum  of  46  per  cent, 
in  1868.  These  tariffs  have  been  changed  again  and 
again  to  suit  the  party  predominant  for  the  time 
being,  and  have  never  been  substantially  reduced. 
Our  exports  have  accordingly  shown  the  most  violent 
fluctuations,  having  hardly  (except  in  the  inflation  of 
1870-1873)  exceeded  the  £30,000,000,  which  was  the 
figure  for  1866,  nor  increased  at  all  since  1880. 
Finally,  the  McKinley  tariff  of  1890  taxes  imports 
29  per  cent,  ad  valorem  on  the  average.  [See  Note 
3,  p.  150.] 

Within  two  years  a  reaction  against  McKinley  has 
followed  ;  the  "  Democrats  "  have  been  returned,  and 
the  tariff  is  to  be  reduced.  In  March,  1893,  President 
Cleveland  told  his  fellow -citizens  that  they  "could 
not  defy  with  impunity  the  inexorable  laws  of  finance 


THE  NINETEENTH  CENTURY.  69 

and  trade."  All  abuses,  revenue  from  tariff  not 
required  by  the  State,  pensions,  combinations,  are  to 
be  remedied,  and  he  continues  :  "  While  there  should 
be  no  surrender  of  principle,  our  task  must  be  under- 
taken wisely,  without  vindictiveness.  Our  mission  is 
not  punishment,  but  the  rectification  of  wrongs.  If 
in  lifting  the  burdens  from  the  daily  life  of  our 
people  we  reduce  inordinate  and  unequal  advantages 
too  long  enjoyed,  this  is  but  a  necessary  incident  of 
our  return  to  right  and  justice.  If  we  exact  from 
unwilling  minds  acquiescence  in  the  theory  of  an 
honest  distribution  of  the  fund  of  governmental 
beneficence  treasured  up  for  all,  we  but  insist  upon 
the  principle  which  underlies  our  free  institutions. 
When  we  tear  aside  the  delusions  and  misconceptions 
which  have  blinded  our  countrymen  to  their  condi- 
tion under  vicious  tariflf  laws,  we  but  show  them  how 
far  they  have  been  led  away  from  the  paths  of  con- 
tentment and  prosperity.  When  we  proclaim  that 
necessity  for  revenue  to  support  Government  furnishes 
the  only  justification  for  taxing  the  people,  we 
announce  a  truth  so  plain  that  its  denial  would  seem 
to  indicate  the  extent  to  which  judgment  may  be 
influenced  by  familiarity  with  perversions  of  taxing 
power;  and  when  we  seek  to  reinstate  the  selt- 
confidence  and  business  enterprise  of  our  citizens  by 
discrediting  abject  dependence  upon  the  governmental 
favour,  we  strive  to  stimulate  those  elements  of 
American  character  which  support  the  hope  of 
American  achievements." 

This  cannot,  however,  be  regarded  as  a  final  settle- 
ment of  the  dispute.     The  tariflf  will  not  be  so  far 


70  ENGLAND'S  FOREIGN  TRADE  IN 

reduced  that  it  will  resemble  the  English  system  ; 
nor  is  the  "  Republican  "  party  destroyed.  [See  Note 
3,  p.  150.] 

/  It  is  in  the  United  States  that  the  Free  Trade 
battle  is  beinof  fouejht  out  for  the  edification  of  the 
world.  They  have  the  greatest  advantages  from  the 
Protectionist  point  of  view.  The  republic  is  so  vast, 
the  population  and  the  climate  so  varied,  that  it 
already  produces  part  of  all  the  different  goods  they 
require,  and  is  almost  a  world  in  itself.  Considering 
the  room  there  still  is  for  the  increase  of  population 
to  adjust  itself  to  requirements,  in  the  future  they 
might  reduce  their  foreign  trade  to  almost  nothing,  as 
they  at  one  time  reduced  their  merchant  navy,  and 
the  loss  would  be  less  to  them  than  to  any  other 
community,  while  their  wealth  may  well  continue  to 

<,  increase  and  conceal  the  deficit. 

The  Americans  have  the  English  qualifications  for 
work,  and  in  most  of  our  manufactures  our  advantage 
is  only  differential,  that  is,  we  have  some  one  quality 
in  a  slightly  greater  degree  than  they.  Their  mineral 
resources  are  still  partiall}^  unknown,  and  it  is  possible 
that  in  the  not  very  distant  future  they  may  need 
all  the  corn  they  grow,  and  so  not  require  an  outlet 
for  it. 

/  However,  it  is  not  the  American's  declared  intention 
to  separate  himself  from  the  rest  of  the  world ;  his 
hope  is  to  tax  the  foreigner  and  sustain  no  loss  him- 
self. The  McKinley  and  former  tariffs  should  have 
gone  far  to  undeceive  him ;  the  southern  farmers  find 
that  they  are  being  taxed,  and  though  a  tariff  has 
been  fixed  on  imported  agricultural  produce,  they  are 


THE  NINETEENTH  CENTURY.  71 

not  satisfied  ;  the  opposition  party  is  very  strong,  and  ■ 
if  anything  occurs  to  make  America  too  poor  to  afford 
her   present   waste,  Free   Traders   may   continue   to 
enjoy  the   triumph  which   the  recent  elections  have 
begun.     [See  note  3,  p.  150.] 

This  is  a  suitable  place  for  noticing  the  gradual 
development  of  Indian  trade. 

Our  exports  to  India  have  shown  a  very  regularN 
progression  during  the  whole  of  the  century.     The  ' 
East  Indian  Company  did  more  harm  by  monopolising 
the  trade  outside  their  immediate  territory,  by  selling 
goods  in  England  at  unreasonable  prices,  and  exacting 
privileges   vexatious   and   hurtful   to   other   traders, 
than  by  neglecting  to  develop  the  resources  of  India  ; 
and  it  was  chiefly  because  the  interests  committed  to 
it  were  becoming   too  vast  for  private  management 
that  the  repeal   of  its  charter  became   necessary  in  I 
1833. 

India  and  our  colonies  have  commercially  some 
points  in  common.  Both  have  been  useful  and 
regular  markets  for  our  special  manufactures, 
cotton  and  machinery ;  and  both,  without  inj  ury  to 
our  trade,  have  availed  themselves  of  the  permission 
granted  to  them  in  1822-1825  to  trade  with  other 
countries. 

The  Suez  Canal  had  a  great  effect  in  altering  the 
direction  of  Indian  trade.  European  countries  began 
to  import  direct  from  India ;  and  whereas  in  1871 
£30,000,000  worth  of  goods  was  exported  to  England 
out  of  a  total  of  £57,000,000  worth,  in  1887  the 
values  were  £25,500,000  and  £66,000,000,  and  in 
1900  £22,500,000  out  of  £78,000,000. 


I. 


72  ENGLAND'S  FOREIGN  TRADE  IN 

Our  trade,  however,  is  not  really  diminished,  for 
India  received  two-thirds  of  her  imports  from  us  in 
1900,  and  payment  is  made  indirectly. 

The  use  of  jute  as  a  substitute  for  hemp  in  coarse 
mattings,  bags,  etc.,  has  since  1860  given  to  India  a 
large  and  steady  trade,  and  to  England  another  manu- 
facture. India,  England,  and  the  Continent  compete 
in  the  manufacture,  and  the  raw  material  reaches  the 
Continent  both  directly  and  through  England. 

India's  cotton  trade,  though  long  in  existence,  re- 
ceived its  great  impetus  from  the  American  War,  and 
was  then  firmly  established.  So  great  were  India's 
gains  at  that  time  that  she  obtained  enough  money 
and  credit  to  import  iron  from  us  in  large  quantities 
and  develop  her  present  railway  system.  The  inflation 
was  exaggerated,  aud  the  interest  of  the  debt  then 
contracted  has  been  a  burden. 

Raw  cotton  is  still  exported  from  India,  while  the 
manufactured  goods  are  imported  ;  but  now  the  near- 
ness of  the  raw  material,  the  cheapness  of  labour,  and 
the  extent  of  the  demand  in  the  neighbourhood,  are 
making  it  profitable  to  manufacture  on  the  spot.  The 
relative  advantages  of  Indian  labour  in  the  heat,  and 
that  of  the  skilled  Englishman  in  his  own  climate, 
have  still,  however,  to  be  decided.^  A  new  and  im- 
portant factor  in  Indian  trade  has  recently  been  intro- 
duced by  the  discovery  of  extensive  fields  of  coal  in 
India,  which  is  likely  to  have  marked  eflect  on  her 
manufacturing  power.  The  production  in  1899  was 
4,900,000  tons. 

1  Vide,  VI.  1  infra. 


g 

§ 

Q 

o 

^i 

o' 

§ 

THE  NINETEENTH  CENTURY.  73 

4.    BALANCE    OF    IMPORTS    AND    EXPORTS — ENGLAND'S 
FOREIGN   INVESTMENTS. 

It  is  a  maxim  of  Free  Traders  that  exports  and^ 
imports  pay  for  each  other ;  and  this,  when  rightly 
interpreted,  is  strictly  true. 

But  the  most  casual  glance  at  a  diagram  shows  the 
marked  and  growing  excess  of  imports  over  exports 
since  1855.  This  is  due  partly  to  the  interest  paid 
by  other  countries  on  our  loans  to  them,  which  income 
was  estimated  as  nearly  £90,000,000  in  1900,  and 
partly  to  the  earnings  of  our  shipping. 

The   countries   with    which   we    trade   may   con-\ 
veniently  be  divided  into  three  classes  :  those   who  [ 
receive  from  us  in  imports  more  than  they  return  in  | 
exports;    those   who   receive   and   return   the   same 
quantity ;   and,  the   largest  class,  those   who  return 
more  than  they  receive. 

No  country  has  been  long  in  the  first  class,  and  no 
country  of  importance  is  now  in  it.  But  from  1868 
to  1875  Germany  was  taking  great  quantities  of 
exports,  from  which  it  appears  that  some  of  the  war 
indemnity  paid  by  France  was  advanced  by  us,  and 
as  we  should  expect,  France  was  repaying  us  in  the 
following  years,  when  her  imports  to  us  were  large. 

At  the  time  of  the  gold  discoveries  imports  into 
Australia  were  largely  in  excess  of  exports,  being  paid 
for  in  gold,  not  goods. 

As  our  Colonies  and  the  more  backward  countries 
have  developed,  they  have  passed  from  the  first  class, 
through  the  second,  and  into  the  third.     In  the  early 


74  ENGLAND'S  FOREIGN  TRADE  IN 

stages  we  exported  goods  on  loan  ;  after  a  certain 
period  the  interest  payable  on  these  loans  becomes 
greater  than  new  capital  sent  out,  and  so  the  normal 
condition  is  reached,  in  which  an  excess  of  the  goods 
they  send  over  those  they  receive  pays  for  the 
services  of  our  ships.  South  Africa  is  still  in  the 
first  class ;  Canada  has  long  been  in  the  third  ; 
Australia  and  India  have  fluctuated  near  the  second ; 
South  America  has  recently  reached  the  third. 

In  the  third  class  we  find  the  United  States, 
Germany,  Russia,  France,  Holland,  Belgium,  and 
India.  The  excess  is  most  marked  in  the  case  of 
the  United  States,  and  is  a  striking  illustration  of 
the  effect  of  a  high  tariff,  for  our  exports  have 
decreased,  and  our  imports  thence  are  paid  for  by 
circular  trade  through  India,  China,  and  other 
countries.  Thus,  the  whole  exports  of  the  States 
have  greatly  exceeded  their  imports  in  recent  years, 
but  their  imports  from  the  West  Indies,  Chili,  Brazil, 
China,  Japan,  and  France  exceed  their  exports  to 
those  countries. 

Our  shipping  figures  throw  some  light  on  this. 
Since  1882  we  have  done  half  the  carrying  trade  of 
the  States,  and  a  large  fraction  of  it  in  former  times  ; 
13  per  cent,  of  our  vessels  are  employed  in  this  trade. 
The  same  applies  to  our  trade  with  Russia,  Germany, 
and  France,  from  whom  we  probably  earned  5,  G,  and 
11  millions  respectively  in  1883,  and  a  similar  sum 
from  Holland.  [These  statements  may  not  apply  to 
1905.] 

There  is  still  a  large  sum  to  be  accounted  for  in 
connection    with    the    United    States,    Russia,    and 


THE  NINETEENTH  CENTURY.  75 

France ;  we  must  be  receiving  from  them  great  sums 
of  interest  in  return  for  capital  lent  in  the  two  great 
periods  of  railway  mania  and  at  other  times. 

From  India  we  received  goods  of  great  value  at  the 
time  of  the  cotton  famine ;  now  we  receive  interest 
on  loans,  and  the  balance  is  complicated  by  special 
causes. 

Generally,  the  balance  of  the  nominal  values  of  our  \ 
imports  and  exports  is  governed  by  the  following 
factors  : — 

All  capital  which  is  sent  abroad  goes  in  the  form 
of  exports :  all  interest  on  this  capital  returns 
in  the  form  of  imports. 

Our  ships  do  a  large  fraction  of  the  carrying  trade 
of  the  world,  and  thus  pay  annually  for 
some  £90,000,000 1  worth  of  imports. 

It  is  possible  to  correct  the  total  figures  of  im- 
ports and  exports  for  the  earnings  of  shipping  and 
many  smaller  causes,  and  a  considerable  excess  of 
imports  remain,  which  represents  the  interest  paid  on 
capital  abroad,  less  the  amount  of  capital  freshly 
exported.  Thus,  if  we  exported  capital  exactly  equal 
to  the  value  of  the  interest  due  to  us,  this  excess  of 
imports  would  be  nothing,  as  was  the  case  in  1873 
and  1886.  If  more  capital  were  sent  abroad  than 
interest  returned,  exports  would  be  in  excess,  as  in 
1859,  1872,  and  other  years ;  if,  as  has  generally  been 
the  case  since  1860,  imports  (thus  corrected  for 
shipping,  etc.)  are  in  excess,  we  are  receiving  interest 
from  abroad  in  excess  of  capital  sent  out. 

^  The  exact  figure  is  not  known  :  this  is  the  estimate  adopted 
by  the  Board  of  Trade  in  1903  (Cd.  1761,  p.  101). 


76  ENGLAND'S  FOREIGN  TRADE  IN 

For  instance,  in  1880  imports  actually  exceeded 
exports  by  £122,000,000.  Some  £70,000,000  paid  for 
the  services  of  English  ships,  and  other  minor  causes, 
reduced  the  excess  to  £45,000,000.  Apparently,  in 
that  year,  there  was  about  £1,500,000,000  of  English 
capital  abroad,  paying  about  5  per  cent,  on  an  average. 
Thus  £75,000,000  was  due  for  interest.  £45,000,000 
only  was  received,  and  therefore  about  £30,000,000 
was  left  abroad  for  re-investment.^ 

The  figures  give  no  obvious  means  of  deciding 
actually  how  much  interest  returned,  and  how  much 
capital  was  newly  invested,  they  only  show  the  excess 
of  the  former  over  the  latter ;  but  by  close  scrutiny 
(as  explained  in  note  at  end  of  chapter)  the  actual 
values  can  approximately  be  found.- 

It  appears  that  before  1854  we  had  some 
£550,000,000  invested  abroad,  in  Government  loans 
and  railways  presumably.  Increasing  annual  invest- 
ments, averaging  £30,000,000  per  annum,  which 
would  largely  take  the  form  of  machinery  and  stock 
for  railways,  and  manufactures,  which  would  pay  the 
wages  of  the  labourers  emplo^^ed  in  their  construction, 
brought  the  total  in  1860  to  about  £750,000,000. 

During  the  cotton  crisis  slightly  less  capital  appears 
to  have  been  invested;  but  from  1870-1875,  during 

^  More  accurately,  £75,000,000  interest  was  received,  while 
£30,000,000  new  capital  was  invested. 

-  The  figures  given  so  far  are  due  to  Mr.  Giffen's  well-known 
investigations,  interpreted  by  recognised  estimates.  The  figures 
which  follow  are  new,  and  not  so  reliable,  but  agree  with  all 
available  facts,  and  appear  to  be  the  only  ones  consistent  with 
them. 


THE  NINETEENTH  CENTURY.  77 

the  great  inflation  before  and  after  the  Franco- 
Prussian  War,  some  £55,000,000  annually  brought 
the  total  to  not  much  less  than  £1,400,000,000.  A 
reaction  followed,  and  for  three  years  there  was  very 
little  investment,  but  from  1881  to  1890,  it  seems  not 
improbable  that  £600,000,000,  was  added,  and  the 
total  brought  to  £2,000,000,000.1 

We  have  thus  additional  evidence  of  the  great  in-  \ 
vestments  in  railways  which  took  place  in  1871  and  | 
1872  ;  of  the  growing  confidence  in  international  \ 
securities  ;   of  the  increased  savino^  that  made  these  i 

.4 

investments  possible,  and  of  the  effect  a  commercial 
depression  has  in  checking  enterprise.  We  also  see 
that  (if  the  figures  are  to  be  trusted)  the  depression  of 
1886-88  was  not  marked  by  a  fall,  but  rather  by 
an  increase  in  capital  invested  (unless  a  sudden  and 
heavy  fall  in  interest  took  place  just  at  that  time), 
which  confirms  the  impression  that  this  crisis  was  not 
accompanied  by  any  great  fall  in  the  volume  of  trade  • 
transacted. 

Great  as  has  been  the  benefit  which  England  has\ 
conferred  both  on  her  colonies  and  on  nearly  all  the 
foreign  nations  of  the  world  in  supplying  them  with 
£2,000,000,000,  which  her  industry  and  genius  enabled 
her  to  spare,  she  has  not  been  altogether  blameless  in 
her  transactions.  Her  capital  was  so  tempting  to  the 
foreigner,  and,  since  capital  invested  in  foreign  rail- 
ways almost  always  extended  her  trade  and  reacted 
to  her  benefit,  so  easy  for  them  to  obtain,  that  nation 

"•  More  reliance  may  be  placed  on  the  relative  rates  of  increase 
than  on  the  actual  figures.  The  total  can  hardly  be  estimated 
accurately  within  25  per  cent. 


78  ENGLAND'S  FOREIGN  TRADE  IN 

after  nation  has  borrowed  more  than  they  were  able 
to  use  or  could  afford  to  repay.  Great  nations,  like 
Russia  and  Germany/  were  spendthrifts,  in  1873, 
with  our  capital,  Russia  especially  launching  into 
enterprises  which  crippled  her  resources.  The  United 
States  have  speculated  with  our  capital.  Semi- 
civilised  nations,  as  the  Turks  and  Greeks,  have 
over-borrowed  and  repudiated  their  debt,  after,  how- 
ever, the  original  investors  had  more  than  repaid  their 
outlay  by  a  few  years'  exorbitant  interest.  India  has 
borrowed,  and  at  one  time  was  borrowing  again  to 
pay  the  interest.  England,  as  a  nation,  is  not  free 
from  the  taint  of  money-lending.^ 

Her  action  towards  her  colonies  has  been  very 
striking  from  one  point  of  view,  as  an  Athenian  or 
Phoenician  perhaps  would  regard  it.  Practically,  her 
sons  have  emigrated  to  a  new  country ;  she  has  first 
allowed  them  to  own  the  land,  then  encouraged  them 
to  mortgage  the  country  to  an  unlimited  extent,  while 
they  spend  the  money  as  much  on  gratifying  them- 
selves as  on  enriching  their  estate.  Presently  they  find 
themselves  in  a  predicament,  in  which  Australia  and 
New  Zealand  have  been  in  danger  of  being  placed,  i.e., 
while  their  resources  are  crippled,  they  are  burdened 
with  the  interest  on  a  tremendous  debt. 


1  Germany  appears  to  have  borrowed  from  us,  as  well  as 
receiving  the  war  indemnity  from  France. 

2  Wilson,  writing  about  1875,  says,  "Future  generations  will 
cite  the  conduct  of  the  English  in  regard  to  the  Turks'  constant 
demand  for  money  [1853-73]  as  one  of  the  most  original  ex- 
amples of  folly,  and  perhaps  of  crime,  that  the  nineteenth 
century  has  to  offer." 


THE  NINETEENTH  CENTURY.  79 

Note. — Given  the  sums  of  money  which  represent  the  interest 
received,  less  the  capital  newly  invested,  and  given  the  total 
capital  abroad  at  any  one  time  :— If  it  is  permissible  to  assume 
that  the  average  rate  per  cent,  does  not  change  rapidly,  it  is 
only  a  somewhat  difficult  arithmetical  problem  to  find  the  actual 
interest  and  rate  per  cent,  for  one  year,  and  hence,  working 
backwards  and  forwards,  to  find  it  for  any  year.  The  difficulty 
of  the  solution  is  that  individual  figures  cannot  be  trusted, 
but  series  of  years  must  be  taken. 

Further,  by  taking  longer  intervals,  it  is  (theoretically  at  any 
rate)  possible  to  find  the  total  capital  invested  as  well  as  the 
interest. 

This  method  has  been  used,  and  the  results  obtained  com- 
pared with  all  available  estimates,  to  give  the  figures  used  in 
the  text.  They  are  certainly  not  exact,  but  it  seems  improbable 
that  they  are  much  in  error. 

Note  to  Revised  Edition.  —  Judging  from  the  information 
tabulated  in  the  Board  of  Trade's  Memoranda  (Cd.  1761,  p. 
104),  the  capital  held  abroad  has  increased  considerably  since 
1890  ;  but  as  this  subject  has  become  a  matter  of  controversy, 
we  do  not  ofi'er  any  new  estimate. 


8o  ENGLAND'S  FOREIGN  TRADE  IN 


V.~TRADE  IN  THE  PERIOD,  1870-1892. 

1.     THE     CRISES     OF     1873     AND     1883,     AND      THEIR 
CAUSES. 

/  The  most  marked  features  of  the  diagram  of  imports 
I  and  exports  in  1870-1892  are  the  two  great  falls  in 
I  value ;  the  first,  most  noticeable  in  exports,  beginning 
1  in  1873,  and  reaching  its  lowest  point  in  1878,  after 
'  which  the  values  increase  again  till  1882 ;  the  second 
'  beginning,  both  in  imports  and  exports,  in  1883, 
while  the  recovery  commences  in  1886. 

These  changes  may  be  due  either  to  diminution  of 

the  actual  amount  of  goods  exported  and  imported,  or 

to  a  reduction  of  prices  of  these  goods,  or  to  both 

causes.     We  shall  see  subsequently  that  on  the  whole' 

the   amount    rapidly   increased,   and,   therefore,   the 

^depression  is  mainly  due  to  a  fall  of  prices. 

y     Depressions  have  followed  one  another  in  England 

with  a  certain  regularity  at  intervals  of  about  ten 

years  through  the  century.     The  phenomena  attend- 

I  ing  them  are  similar.     First,  an  increase  in  demand 

j  and  an  expectation  of  high  prices  have  caused  an 

exPcggerated  output,  rash  undertakings  and  credit  on 

too  easy  terms ;    then,  as  the  demand   is   satisfied, 

prices  fall  with  great  rapidity,  credit  is  shaken,  and 

enterprises  which  had  no  sound  basis  fail. 

These  phenomena  are  all  present  in  the  crisis  of 


DIAGRAM  n, 

shor/tng  aepress/ons  of  trade         lejo  —IS^Z. 

1870  1875  IMO  (385  1S90 


1            i     1     1      :      i     1     !                                                  J_ 

1    !  I  i  1  1             .  .  T 

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1    1 

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°  ,  ;     /                    '         /nJ  1    / 

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-^                                S^                         4 

i'i-; 

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.   ,• 

:          '±        "±        ~ 

?P0  wo  C^D      ' 

1       ' 

600  000  000 

r,r  60  000   OOC, 


.600.030000 


J5(?  000  000 


69  1870    71      '2      "      '4    I87S   X    -77      78     79    188O  81      82     63     84   l685  86    87     88      8S   Ig90 

A.  Value  of  /mpor{s  i  £xports  fogether 

B.  The  same  reduced  i>y  index  numbers  to  go/d  ualues  o/  /S 89 

C.  Shivpinq  evtered  <  cleared  to  i  ''rom  Great  Britain    >  ■  loo.ooo  tons 
d  Value  0/ /mporls    l    ^alue  of  f^xports  including  /e  ejrnoi 


too  000  oca 


of  t 'ports. 


If  /f   ejrporis 


THE  NINETEENTH  CENTURY.  8i 

1873 :  "  Having  its  origin  in  the  excessive  lock  up  of 
capital  in  the  construction  of  railways,  especially  in 
America  and  Germany,  many  of  which  when  built 
had  neither  population  to  use  them  nor  traffic  to 
carry;  in  the  wild  speculation  that  followed  the 
German  assertion  of  supremacy  on  the  Continent ;  in 
the  exaggerated  armaments,  which  withdrew  an  in- 
ordinate amount  of  labour  from  productive  industry 
and  overweighted  the  taxpayers  of  the  great  European 
nations,  and  in  over-production  in  the  principal  trades 
in  all  commercial  countries ;  it  was  aggravated  by  a 
succession  of  bad  harvests  in  both  hemispheres ;  by 
famines  in  the  East  and  in  South  America ;  by  re- 
pudiations by  governments  and  other  public  debtors ; 
and  by  the  political  anxieties  which  the  re-opening 
of  the  Eastern  Question  gave  birth  to."  ("  Statist," 
1879.) 

More  generally  the  cause  may  be  put  in  this  way  : — 
The  analogy  between  the  business  of  an  individual 
and  of  a  nation,  though  it  must  not  be  pushed  too  far, 
w^ill  illustrate  the  change  of  trade  before  and  after 
1870.  Regarding  France,  Germany,  and  the  United 
States  as  so  many  individuals  engaged  in  trade,  in 
the  years  1820-1850  a  great  fortune  {i.e.,  me^.hanical 
inventions  and  physical  discoveries,  aided  by  Free 
Trade)  fell  to  England  especially,  and  to  the  others  in 
part.  Naturally  elated,  and  not  being  able  to  use  his 
wealth  to  the  full,  he  (England)  lends  alike  credit, 
money,  and  goods  to  his  neighbours,  whether  their 
business  was  sound  or  shaky,  and  also  to  his  clerks 
and  sons,  who  are  setting  up  business  on  their  own 
•account.     This  process  cannot  continue  ;  the  demand 


82  ENGLAND'S  FOREIGN  TRADE  IN 

for  capital  is  unnaturally  increased,  the  immense  sums 
lent  to  and  invested  by  his  neighbours  cannot  at  once 
fructify ;  inventions,  especially  tending  to  accelerate 
trade,  continue  to  move  capital ;  there  are  difficulties 
with  employes,  whose  great  need  is  more  work  ;  the 
natural  result  is  that  every  little  opening  is  magnified 
and  jumped  at,  the  increasing  pace  increases  risk,  and 
fluctuations  are  more  violent;  but  there  is  no  real 
basis  for  increased  trade,  and,  on  the  whole,  after  the 
first  great  impulse  it  remains  stationary. 

Earlier  depressions  in  the  English  trade  had  been 
felt  in  America,  and  as  England  and  the  States  be- 
came more  closely  connected,  any  disturbance  in  one 
country  was  at  once  echoed  in  the  other ;  but  it  is 
most  conclusive  evidence  of  the  increasing  intimacy 
of  international  relations,  that  the  depression  of  1873 
was  felt  with  great  severity  in  "  Austria,  Germany, 
Russia,  the  United  States,  and  the  South  American 
countries,"  ^  while  many  other  countries  were  also 
affected. 

{      The  depression  was  first  felt  in  countries  which 

.  produced  raw  materials  ;  borrowing  their  capital  from 
manufacturing  States,  and  finding  the  process  very 
profitable,  so  long  as  capital  was  easily  obtained,  they 
Boon  flooded  the  markets  of  the  old  countries  with 

i  more  produce  than  was  required  for  consumption  or 
manufacture ;  when  the  supply  of  capital  was  checked, 
and  the  demand  for  raw  produce   decreased,  it  was 

i  not  possible,  for  instance  (even  if  there  had  been  an 

^  Giffen's  "Essays  on  Finance,"  p.  109  (First  Series),  from 
which  source  the  substance  of  the  following  paragraph  is  also 
taken. 


THE  NINETEENTH  CENTURY.  83 

intimate  knowledge  of  the  state  of  English  finance 
in  those  remote  districts),  suddenly  to  diminish  the 
harvests,  to  decrease  the  quantity  of  corn  already 
sown,  to  find  new  employments  for  the  multitude  of 
labourers  engaged  in  agriculture,  or  pay  the  interest 
on,  and  working  expenses  of,  railways  no  longer 
needed.  The  exploitation  of  these  countries,  Austria, 
the  States,  South  America,  and  Russia,  had  been 
carried  too  far.  Invaluable  as  their  development  has 
proved  to  the  next  generation,  the  capitalists  who  had 
supported  it,  just  as  the  original  investors  in  English 
railways,  suflfered  great  immediate  loss. 

It  is  in  this  direction  that  we  must  look  for  the 
general  cause  of  the  depression  ;  it  remains  to  point 
out  the  special  events  which  led  to  the  inflation  of 
1871  and  1872,  and  which  made  1873  the  date  of  tbe 
crisis  which  was  sooner  or  later  inevitable.  The 
Franco-German  War,  rapid  in  its  course,  prolific  in 
wide-reaching  results,  destroyed  wealth  in  France 
and  Germany  alike,  for  whose  re-creation  there 
was  room  and  necessity  at  its  close.^  Then  the  ; 
war  indemnity  of  £200,000,000  paid  to  Germany, 
ultimately  out  of  the  hoards  of  the  French  peasantry 

^  "The  great  destruction  of  capital  which,  is  involved  in  a 
war,  such  as  that  of  1870-1871,  naturally  stimulates  production 
until  the  waste  of  capital  is  repaired.     But  when  this  has  been 
done,  and  consumption  returns  to  its  normal  level,  the  world's 
capacity  of  production  will  naturally  be  in  excess  of  its  ordinary  *   | 
requirements  ;  and  the  inevitable  result  of  such  a  state  of  things   j 
is  either  a  restriction  of  production,  or  a  reduction  in  the  rate    • 
of  profit."     (Report  of  Royal  Commission  on  the  Depression  of   I 
Trade,  1886.) 

*  Perhaps  "  immediate"  would  be  more  correct  than  "  ordinary." 


84  ENGLAND'S  FOREIGN  TRADE  IN 

for  the  most  part,  caused  a  great  influx  of  capital  into 
Germany,  and  an  immense  demand  for  English  goods 
especially  those  connected  with  railway  construction, 
and  produced  in  Germany  such  a  burst  of  apparent 
prosperity  that  ordinary  trade  and  ordinary  methods 
of   business  were  neglected,  and  the  seeds   of   com- 
mercial disaster  sown.     The  capital  overflowed  into 
Austria    and    Russia,    and    very   soon    the    world's 
market  was  over-stocked,  and   trade   brought   to   a 
standstill. 
/     A  depression  is  defined  as  "a  diminution,  and  in 
I  some  cases  an  absence  of  profit,  with  a  corresponding 
i  diminution  of  employment  for  the  labouring  classes." 
!  That   is   to    say,   though    "over-production"    under 
normal   conditions  is  impossible  in  the  long  run,  yet 
for  a  short  time  the  production   of  large  classes  of 
goods  may  be  in  excess   of   any  demand  at  a  price 
which  will  give  profit. 

The  fall  in  prices  in  this  depression  was  the  begin- 
1  ning  of  the  long  continuous  fall,  which  did  not  cease 
'  till  1895  or  1896.  It  was  aggravated  especially 
by  the  fact  that  the  inflation  was  chiefly  in  the  iron 
and  steel  trades,  where  the  output  cannot  be  inde- 
finitely increased  at  once,  and  where  workmen  can 
easily  at  a  time  of  high  prices  further  increase  them 
by  demanding  higher  wages. 

In  England  the  effect  was  enhanced  and  prolonged 
by  the  increased  competition  of  foreign  manufactures, 
which  at  that  time  in  Germany  and  elsewhere  were 
receiving  great  attention,  accompanied  by  the  great 
reaction  against  Free  Trade,  which  prevented  our 
i  manufactures  from  having  a   fair  chance,  except  in 


THE  NINETEENTH  CENTURY.  85 

neutral  markets,  for  continental  nations  raised  their 
tariffs  to  keep  out  our  goods,  and  preserve  the  home 
market  for  their  own.  '' 

The  reaction  has  been  very  tardy .^  Prices  have  con- 
tinued to  fall,  capital  having  accumulated  (which  is  a 
sign  that  the  depression  is  not  a  serious  injury  to  all 
classes,  as  will  be  seen  later),  the  rate  of  interest 
becomes  lower  and  lower,^  wages  rise  in  England 
more  rapidly  than  on  the  Continent,  and  the  lessening 
profit  which  the  manufacturer  can  obtain  from  all 
these  causes  has  continued  to  be  a  cause  of  grave 
anxiety. 

Another  depression  began  in  1883,  but  has  not  so  '^.j 
many  features  of  interest  as  that  of  1873.  Its  chief  I 
characteristics,  as  summarised  in  the  Majority  Report  i 
of  the  Commission  on  Depression,  were —  ; 

(a)  A  very  serious  falling  off  in  the  exchangeable  ; 
value  of  the  produce  of  the  soil ; 

(h)  An   increased   production   of   nearly  all  other  , 
classes  of  commodities  ;  ■' 

(c)  A  tendency  in  the   supply  of  commodities  to 

outrun  the  demand  ; 

(d)  A  consequent  diminution  in  the  profit  obtain- 

able by  production,  and 

(e)  A  similar  diminution  in  the  rate  of  interest  on 

invested  capital. 
Thus,  except  that  the  long,  not  to  say  permanent, 

1  This  paragraph  is  as  it  was  written  in  1893,  since  which 
date  the  various  factors  have  changed. 

2  So  far  as  the  manufacturer  borrows  capital  this  is,  of  course, 
a  benefit  to  him  ;  but  profits  on  fixed  capital  fall  when  interest 
on  new  capital  is  small. 


S6  ENGLAND'S  FOREIGN  TRADE  IN 

depression  in  English  agriculture  was  a  comparatively 
new  and  effective  factor  in  the  difficulties  of  trade, 
this  depression  does  not  differ  from  previous  ones. 
It  makes  prominent,  however,  some  of  the  chief 
features  of  our  modern  trade,  which  will  be  discussed 
later,  viz.^  the  increasing  severity  of  competition  both 
in  production  and  manufacture  of  raw  materials,  the 
diminishing  profits  which  capital  can  secure,  and  the 
gradual  displacement  of  trades,  which  always  brings 
bitter  complaints  from  those  who  are  injured  by  it. 


2.  THE  CONSTRUCTION  OF  RAILWAYS,  AND  THE  EFFECT 
OF   INCREASED   FACILITIES  OF  TRANSPORT. 


"  It  is  not  too  much  to  say  that  in  the  years  1869- 
1872  the  foreign  railways,  and  other  undertakings 
launched,  were  such  as  there  were  not  materials  in  the 
markets  of  the  whole  world  to  carry  through  without 
an  enhancement  of  values  that  should  not  only  render 
the  undertakings  themselves  hopeless,  but  seriously 
cripple  much  well-established  trade."  {EncyclcypGedia 
Britannica.) 

From  this  statement  we  further  see  the  great  in- 
fluence that  railway  construction  had  on  the  depression 
of  trade  ;  and  it  will  be  well  to  give  a  brief  review  of 
the  history  of  railways  from  their  first  beginning,  in 
order  to  be  able  to  judge  more  clearly  their  effect  on 
industrial  movements. 

As  we  have  seen,^  England  took  the  lead  in  Europe, 
and  had  developed  her  system  before  1850,  having 
constructed  6,600  miles,  or  about  one  -  third  of  her 
1  IV.  1  supra. 


THE  NINETEENTH  CENTURY. 


87 


present  total,  at  that  date.  France  began  railway 
building  in  1841,  Italy  in  1850,  other  European  coun- 
tries in  the  sixth  decade  of  the  century,  causing  an 
increase  of  iron  and  steel  exports  from  England  from 
£8,000,000  in  1850  to  £24,000,000  in  I86O.1 

The   total   numbers   of   the   miles   in   use   at   the 
followino'  dates  were — '^ 


1840 

1850 

I860 

1870 

1880 

1890 

United  Kingdom, 

800 

6,600 

10,400 

15,500 

17,900 

19,800 

The  Continent  of 

Europe,    . 

800 

7,800 

21,400 

47,800      83,800 

110,200 

United  States,   . 

2,800 

9,000 

30,600 

53,400  1    93,600 

158,000 

India,    . 

... 

800 

4,800 

9,300 

16,000 

Australia,    . 

... 

200 

1,200 

5,400 

10,100 

The  rest  of  the 

World,     .       . 

... 

... 

2,800 

5,500 

18,400 

42,200 

Total,       .       . 

4,500 

23,500  66,200    128,200 

228,400 

354,300 

Between  1860  and  1880  railways  on  the  Continent 
increased  four-fold,  and  in  the  United  States  three- 
fold. Most  of  these  lines  were  projected  between 
1869  and  1872 ;  the  figures  of  our  exports  of  steel 
and  iron  beins: — 


1868 

2,042,000  tons, 

£17,634,000 

1872 

3,383,000    „ 

35,996,000 

1876 

2,224,000    „ 

20,737,000, 

while   our   increased   exports   to   Germany  and   the 
United  States  show  their  destination. 

^  For  this  and  other  details,  vide  line  D  in  Diagram  vii. 
2  Mulhall's  "  Dictionary  of  Statistics." 

G 


88  ENGLAND'S  FOREIGN  TRADE  IN 

After  each  of  the  great  railway  booms  of  the  cen- 
tury, for  instance  in  England  about  1847,  in  America 
before  1857  and  1873,  in  India  in  1878,  and  on  the 
Continent  in  1873,  the  collapse  has  been  very  violent 
for  the  materials  are  bought  at  exaggerated  prices ; 
the  weekly  wage  during  construction  is  enormous ; 
no  return  is  obtained  till  the  whole  scheme,  whose 
carrying  out  probably  lasts  many  years,  is  complete ; 
and  in  1870  this  return  was  further  delayed  by  a  new 
cause. 

Until  this  date, railways  had  chiefly  been  constructed 
in  order  to  facilitate  intercourse  along  old  channels, 
to  bring  into  closer  connection  the  great  manufactur- 
ino:  centres  with  each  other  and  with  the  o:reat 
markets ;  but  now  we  arrive  at  a  new  era  of  railway 
building,  already  foreshadowed  in  the  United  States, 
when  the  great  accumulation  of  capital  in  England 
and  the  accession  of  wealth  to  Germany  were  ready 
to  be  used  for  developing  new  countries.  Railways 
are  often  built  in  order  to  create  a  traffic,  and  some- 
times a  new  industiy  and  even  a  population ;  this 
has  frequently  been  the  case  in  America,  is  often 
the  case  in  suburban  districts  in  England,  and  was 
especially  so  in  lines  projected  at  this  time  ;  that  is 
to  say,  lines  were  extended  into  partially  populated 
and  partially  cultivated  districts,  whose  population 
had  no  acquaintance  with  foreign  trade,  no  surplus  to 
export,  no  wish  to  travel.  After  the  railways  were 
completed,  all  this  was  gradually  changed.  Cultiva- 
tion increased,  and  so  did  population  ;  the  old  resources 
of  the  land  were  developed,  more  than  was  necessary 
for  local   consumption  was  produced;  mineral   and 


THE  NINE  TEEN7H  CENTUR  V.  89 

other  natural  wealth,  hitherto  profitless,  was  ready 
for  export ;  the  traffic  grew,  and  the  existence  of  the 
railways  was  ultimately  justified.^ 

But,  in  the  interval,  the  immense  capital  locked  up 
had  no  return,  labour  was  merel}^  drawn  from  pro- 
ductive industries,  ordinary  trades  suffered,  capital 
and  enterprise  being  diverted  from  them,  and  thus 
the  railway  boom  of  1869-1872  was  the  most  effec- 
tive cause  of  the  long  depression  which  followed. 
Gradually  the  capital  locked  up  in  these  and  other 
enterprises  began  to  yield  profit,  trade  returned  to 
its  normal  condition,  and  the  end  of  the  depression 
was  marked  by  further  railway  construction  in  the 
States,  which  gave  a  stimulus  to  our  iron  and  steel 
trade  in  1880.  Since  that  date,  vast  as  has  been  the 
expansion  of  the  railway  system  of  the  United  States, 
its  influence  on  English  trade  has  been  neutralised  by 
the  growing  production  of  steel  in  America. 

The  railway  boom  of  1870  did  not  extend  to  India. 
The  figures  of  Indian  railways  show  a  rapid  extension 
from  1860  to  1863,  a  comparatively  regular  increase 
till  1879,  and  from  then  till  1891  a  more  rapid 
growth  of  some  800  miles  per  annum. 

As  has  already  been  indicated,  the  extension  of 
railways  has  always  had  a  double  influence  on 
English  trade ;  first,  during  the  long  period  in  which 
England  was  the  sole  manufactory  of  iron  and  steel 

^  This  is  not  inconsistent  with  the  fact  that  there  was  already 
(in  1873)  an  excess  of  raw  materials  from  new  countries.  Both 
the  lines  then  in  use,  and  those  only  in  construction,  were,  after 
no  long  interval,  fully  employed  owing  to  the  rapid  growth  of 
trade  and  population. 


90  ENGLAND'S  FOREIGN  TRADE  IN 

on  a  large  scale,  and  when  these  manufactures  occu- 
pied almost  the  first  place  in  our  industrial  system, 
every  new  railway,  projected  in  any  country,  had  an 
immediate  eftect  on  the  volume  and  value  of  our 
exports  ;  secondly,  the  very  existence  of  each  new 
profitable  railway  is  a  proof  that  another  method  has 
been  found  of  making  transport  from  new  sources 
possible  or  of  reducing  existing  freights,  and  it  is  the 
extension  of  railways  over  the  world  which  has 
produced  that  cheapness  and  facility  of  transport, 
without  which  foreign  trade  could  hardly  exist. 

Whether  England  is  losing  her  hold  on  the  steel 
trade  or  no,  that  trade  has  had  permanent  effects  on 
her  industrial  position.  With  her  natural  advantages 
of  large  coal  and  iron  districts  adjoining  each  other, 
with  the  stamina,  endurance,  and  energy  of  English 
workmen,  and  with  the  continual  stimulus  of  renewed 
demands  and  consequent  new  inventions,  her  produc- 
tion, by  its  excellent  quality,  helped  to  establish  her 
commercial  reputation,  and  by  its  quantity  and  value 
was  very  instrumental  in  giving  her  the  financial 
advantage,  which  she  still  possesses,  of  having  large 
sums  due  to  her  from  other  nations.  [See  Note  6, 
p.  152.] 

In  all  Mr.  Brassey's  experience  in  railway  contract- 
ing from  1840-1870,  when  tenders  for  bridges,  loco- 
motives, or  steel  were  issued  to  all  nations,  it  was 
always  English  firms  who  supplied  the  greater  part, 
generally  the  whole,  of  the  goods  for  delivery  in 
Europe,  India,  or  Australia.  Recently,  as  is  well 
known,  owing  to  the  partial  exhaustion  of  English 
mines  and  their  development  in  other  countries,  our 


THE  NINETEENTH  CENTURY.  91 

supremacy  in  this  direction  has  diminished ;  but  our 
iron  and  steel  are  still  of  as  great  importance  as  of 
old  for  the  building  of  iron  ships.  When  the  opening 
of  the  Suez  Canal  necessitated  a  new  class  of  steamers, 
with  a  rapid  realisation  of  the  new  qualities  needed, 
most  creditable  to  English  merchants,  a  large  fleet  of 
iron  steamships  was  built  with  great  rapidity  ;  a  final 
blow  was  thus  given  to  shipbuilding  in  America, 
already  nearly  destroyed  by  suicidal  tariffs  on  wood, 
and  England  obtained  the  business  of  the  canal  and 
made  secure  the  supremacy  of  her  merchant  navy. 

The  Clyde  not  only  supplied  her  own  trade  with 
steamers,  but  in  all  countries,  though  tenders  for 
building  were  open  to  the  whole  world,  it  was  always 
an  Enghsh  firm  who  obtained  the  contract.  In  1870 
all  the  steamers  of  the  British -Indian  fleet,  all  of  the 
North  German  Lloyd's,  60  per  cent,  of  the  Austrian 
Lloyd's,  and  eight-ninths  of  the  Azizieh  Egyptian 
line,  were  of  British  construction.  Our  supremacy  in 
this  respect  continues  till  the  present  date,  and  in  the 
five  years,  1899-1903,  vessels  to  the  extent  of  nearly 
900,000  tons  burden  were  built  in  the  United  Kingdom 
for  foreigners. 

The  evidence  of  the  reduction  of  freights,  so  far  as 
any  is  needed,  is  to  be  found  by  merely  considering 
the  sources  of  our  raw  materials. 

There  is  a  permanent  competition  between  railways 
and  canals  and  navigable  rivers ;  in  the  one  case 
rapidity  and  convenience,  and  in  the  other  economy, 
are  to  be  found.  The  canal  system  of  England  would 
have  been  further  developed  but  for  the  sudden  mania 
for  railways  which  occurred  while  canals  were  still 


92  ENGLAND'S  FOREIGN  TRADE  IN 

being  connected  and  completed.  Importation  of  wheat 
by  the  great  water-ways  of  Southern  Russia  is  older 
than  the  extension  of  railways.  Now  freights  by 
water  have  diminished,  railways  have  brought  the 
interior  of  India,  North  Russia,  Canada,  and  the  vast 
tracts  of  the  United  States  into  competition  with  the 
older  maritime  sources  of  our  grain  supply.  No 
keener,  more  lasting,  or  more  extensive  competition 
can  be  imagined.  Differences  of  soil,  of  climate,  of 
methods  of  cultivation,  of  habits  of  life,  all  have  their 
influence  on  the  price  of  the  grain  before  it  is  placed 
on  the  railway,  canal,  or  sea ;  but  to  such  perfection 
have  methods  of  transport  been  brought,  that  Aus- 
tralia, Canada,  Germany,  and  Essex  all  place  wheat 
at  London  at  the  same  price  ;  and  not  only  is  it 
possible  to  bring  corn  these  vast  distances  at  a  re- 
munerative price,  but  with  the  reduction  of  freights 
this  price  continually  falls. 


Gazette  Price  of  Wheat  and  Meal  Eeduced  by  i  Average  Imports 

CAyerage  for  10  Years).  Index  Nos.  (Millions  of  cwta.) 


1831-40 

56s.  lid. 

per  quarter. 

59s.  6d. 

— 

1841-50 

53s.  4d. 

;j 

62s.  2d. 

— 

1851-60 

54s.  7d. 

•)•> 

57s.  4d. 

28 

1861-70 

51s.  Id. 

5) 

51s.  3d. 

35 

1871-80 

51s.  Id. 

53 

53s.  3d. 

56 

1881-90 

35s.  9M. 

?1 

47s.  9d. 

77 

1891-lSOO 

28s.  3d. 

53 

42s.  7d. 

97 

In  spite  of  these  gradually  falling  prices,  it  has  been 

possible  to  send  us  continually  increasing  stores  of 

grain,  and  when  we  find  that  in  1868  it  cost  65s.  to 

send  a  ton  of  wheat  from  Chicago  to  Liverpool,  while 

^  See  Note  on  p.  96. 


THE  NINETEENTH  CENTURY.  93 

in  1884  it  cost  24s.,  and  Las  since  been  further  reduced, 
there  is  no  room  for  surprise  at  this  increase. 

A  glance  at  the  published  figures  ^  of  imported  grain 
shows  another  result.  Nothing  can  be  more  variable 
than  the  figures  for  different  countries  year  by  year, 
while  the  totals  for  all  show  a  not  irregular  increase. 
We  are  no  longer  dependent  on  the  harvest  at  home 
or  in  any  one  district  for  cheapness  and  plenty.  Before 
our  supply  can  run  short,  there  must  be  a  drought  in 
both  hemispheres,  and  in  the  Southern  and  Northern 
summers.  It  was  not  the  absence  of  grain  in  the  world 
that  caused  the  recent  famine  in  Russia,  it  was  the 
absence  of  means  of  transport  to  the  suffering  districts. 

The  same  phenomenon  is  seen,  but  to  a  less  degree, 
in  the  supply  of  cotton.  The  totals  progress  regularly, 
the  imports  from  the  United  States  are  not  irregular, 
but  the  supplies  from  other  countries  fluctuate 
violently.     [See  Note  4,  p.  151.] 

It  is  not  necessary  to  multiply  instances  of  the  re- 
ductions of  freight.  The  effect  has  been  the  same  on 
other  raw  materials  as  on  wheat,  and  the  reductions 
on  manufactures  have  been  as  great  as  on  raw  materials. 

The  cotton  trade  will,  however,  supply  interesting 
evidence  on  this  point. 

The  freights  for  cotton  were  (in  pence  per  lb.) — 

In  1872.  In  1888. 

1.190  .560     Bombay  to  Lancashire  :  cotton. 

.985  .500    Lancashire  to  Bombay  :  yarn. 

2.175  1.060     Import  of  cotton   and   export  of  yarn 

from  and  to  India. 
.70    Lancashire  to  Japan  or  China. 
.26    Bombay  to  Japan  or  China. 

'  Fic^e  Statistical  Abstracts. 


94  ENGLAND'S  FOREIGN  TRADE  IN 

Thus  since  1872  freights  have  diminished  by  one-half; 
and  in  1888  cotton  could  be  brought  from  India  to 
England  and  sent  when  manufactured  to  Japan  at  the 
total  cost  of  lid.  per  lb.,  so  that  the  differences  of 
situation  only  makes  the  following  differences  in  price 
for  the  same  quality  of  yarn  : — 


Selling  in  India. 

Indian  spmner,  7|d.  ^ 
English  spinner,  8jd.- 


In  China  or  Japan. 

7|d. 
8id. 


At  the  same  time,  on  heavier  goods,  such  as  coal  and 
machinery,  the  freights  were  still  so  heavy  that  coal 
in  Bombay  was  three  times  the  English  price,  while 
machinery  was  25  per  cent,  dearer  in  India  than 
in  England ;  such  exports,  however,  would  have  been 
almost  impossible  before  the  improvement  of  means 
of  transport. 

Great  as  the  reduction  of  freights  has  been,  it  has 
hardly  been  so  great  as  the  quickening  of  transport 
and  communication. 

Instead  of  twelve  miles  an  hour  for  passengers  and 
four  miles  an  hour  for  goods,  forty  miles  is  considered 
slow  for  the  first,  while  for  inland  traffic,  time 
of  transport  is  so  diminished  as  no  longer  to  be  an 
important  item. 

By  sea,  goods  are  no  longer  at  the  mercy  of  the 
weather,  nor  need  they  be  sent  only  at  calm  seasons, 
or  to  obtain  certain  winds. 

It  was  thought  incredible,  in  1872,  that  the  journey 

"•  Raw  cotton,  5d.  ;  cost  of  manufacturing,  2^d. — total,  7Jd. 
"  Raw   cotton  in  India,   5d.  ;   transport  to  England,    ^d.  ; 
manufacturing,  2jd. ;  transport  to  India,  ^d. — total,  8Jd. 


THE  NINETEENTH  CENTURY.  95 

from  England  to  Hong-Kong  could  be  made  in  thirty- 
six  days,  though  steamers  were  already  aiming  at 
their  present  perfection:  now  it  has  been  accomplished 
in  twenty-four  days,  and  there  is  no  reason  to  think 
further  reductions  improbable.  Similarly  the  journey 
from  New  York  to  London  was  reduced  from  nine  days 
in  1872  to  six  days  in  1893. 

These  are  the  reductions  as  steamers  tend  towards 
their  limit  of  speed,  and  are  as  nothing  to  the  reduc- 
tion from  the  old  sailing  times.  Thirty-five  days  to 
Australia  and  twenty-two  to  Calcutta  are  the  times 
that  replace  the  three  or  four  months  required  before 
railways,  or  steamers,  or  the  Suez  Canal  were 
known. 

But  the  greatest  quickening  has,  of  course,  been  in 
communication,  ^j  the  telegraph  an  answer  can  be 
obtained  in,  at  most,  a  few  hours,  instead  of  in  six 
months.  Large  accumulations  of  goods  are  at  once 
rendered  unnecessary,  for  they  can  be  placed  on  ship 
in  Australia  on  the  day  following  the  order  in 
England ;  London  need  no  longer  be  the  depot  for 
Eastern  produce  ;  the  middleman  is  displaced,  and  the 
carrying  out  of  bargains  economised. 

Again,  much  of  the  waste  of  wrongly  anticipating  a 
future  demand  is  avoided.  The  state  of  the  market 
at  Manchester  is  known  at  once  in  Bombay  and  in 
America,  and  exactly  the  right  quantity  and  quality 
of  goods  can  be  sent. 

To  sum  up,  all  the  mechanical  inventions,  the 
growth  of  enterprise,  and  the  freedom  of  trade, 
would  have  been  of  slight  avail,  till  railways  made 
new  countries  accessible,  steamers  brought  them  close 


96  ENGLAND'S  FOREIGN  TRADE  IN 

together,  and   the  telegraph  practically  annihilated 
time. 


1905. — Note  to  p.  92.  This  column  is  of  great  importance  in 
view  of  recent  statements  that  the  Repeal  of  the  Corn  Laws 
did  not  reduce  the  price  of  wheat. 


3.   DIGRESSION   ON   SILVER   AND  ITS   HISTORY 

(1870-1893). 

At  present  Great  Britain  and  many  of  her  depen- 
dencies use  gold  as  legal  tender  in  payment  for  all 
debts,  and  silver  only  to  a  small  amount. 

France,  Italy,  and  some  other  European  countries 
use  gold  chiefly,  but  keep  a  limited  amount  of  silver 
in  circulation. 

In  China,  India,^  other  Eastern  countries,  Mexico, 
and  Spanish  America,  silver  only  is  current. 

Till  1870,  few  inconveniences  arose  out  of  this  dif- 
ference of  standard.     The  price  of  silver  in  European 
countries  varied  very  little  ;  there  was  no  difficulty 
in  selling  rupees  in  Europe,  or  buying  them  in  India 
at  a  constant  rate. 
/     But  changes  began  to  occur  in  about  1870.     The 
j  output  of  American  silver  mines  was  greatly  increased, 
the   price   of    silver   began   to    fall,    and    European 
\  countries,  which  had  been  in  the  habit  of  accepting 
.  any  quantity  of   silver  at  a  fixed  rate   and  coining 
!  it   free,   now   found   that  they  were   buying  above 
i  the   market   rate,   and  that   gold  was   being  driven 
^  out    of    ordinary   circulation,   for  it   was    used   for 
3  See  pp.  101,  102  for  the  alterations  made  in  1893. 


THE  NINETEENTH  CENTURY.  97 

buying  silver,  and  selling  it  at  a  premium  to  the 
Government. 

Consequently,  Germany,  the  Latin  Union,  and 
Holland  limited  their  silver  coinage,  and  Germany 
melted  down  great  quantities  of  her  silver  coins. 
Every  other  European  country  was  obliged  to  follow 
their  example;  the  increased  American  supply, 
further  increased  by  this  melting  down  of  coins,  met 
with  a  reduced  demand,  and  the  price  of  silver  fell 
greatly. 

This  injured  the  silver  party  in  the  United  States ; 
and  under  their  influence  in  1878  their  market  was 
extended,  and  the  price  raised,  by  an  act  compelling 
the  purchase  by  the  States  Treasury  of  silver  to  the 
amount  of  $2,000,000  monthly ;  vendors  of  silver 
obtained  certificates  for  the  amount  sold,  which,  being 
legal  tender  for  certain  purposes,  practically  regulated 
the  currency.  Meanwhile  five-sixths  of  this  silver 
merely  filled  the  Treasury  vaults. 

The  result  was  continual  agitation  among  political 
parties  in  America,  repeated  "  corners  "  in  silver,  and 
the  most  violent  fluctuations  in  the  price  of  silver, 
felt  all  over  the  world.     [See  Note  8,  p.  155.] 

We  have  to  trace  the  effects  on  our  trade  of  these 
two  phenomena  —  short  fluctuations,  and  a  long 
continuous  fall  in  the  price  of  silver. 

The  first  merely  affects  the  actual  transaction  of 
business  between  gold-  and  silver  -  using  countries. 
When  a  purchase  is  made  in  England  of  goods  to  be 
bought  in  India,  the  price  in  gold  in  England  neces- 
sarily varies  with  the  price  in  silver  in  India  ;  the 
amount  in   gold  agreed   to  be   paid    must  be   that 


98  ENGLAND'S  FOREIGN  TRADE  IN 

which  will  exchange  in  India  for  the  silver  necessary 
to  buy  the  goods  there.  If  the  exchange  ratio  of 
silver  for  gold  is  constantly  changing,  and  may 
change  considerably  between  the  beginning  and  com- 
pletion of  the  purchase,  the  risks  and  uncertainties  of 
trade  are  indefinitely  increased,  and  a  sudden  change 
in  the  exchange  ratio  has  often  brought  business 
temporarily  to  a  standstill. 

The  same  difficulty  is  felt  in  arranging  the  revenue ; 
the  estimate  is  based  on  the  expected  exchange  value 
of  the  rupee  which  it  is  impossible  to  foretell ;  if  the 
value  diminishes  there  is  a  deficit,  while  if  it  increases, 
taxation  has  been  unnecessarily  increased,  which  in 
India  is  a  great  evil. 

/     The  second  efiect  is  more  important  and  far-reach- 

'  ing.  The  price  of  silver  has  fallen  in  just  the  same 
way,  and  very  nearly  at  the  same  rate,  as  the  prices 
of  other  commodities.  That  is  to  say,  while  in 
countries  having  a  gold  standard  there  has  been  a 
fall  of  prices  amounting  to  30  per  cent,  in  twenty 
years,  in  silver-using  countries  at  the  same  time  prices 
have  changed  less  rapidly,  for  "  silver  prices  are,  it  is 
said,  less  subject  to  alteration,  through  causes  affect- 
ing the  currency,  than  gold  prices.  The  immense 
volume  of  silver  in  Eastern  countries,  the  conservative 
habits  of  the  people,  the  absence  of  banking  facilities 

I  and  other  commercial  facilities,  all  contribute  to 
this  result : "  ^  that  is,  there  is  a  natural  tendency 
for   prices  measured  in  silver  to   remain  stationary 

I  in  the  East ;    and  the  equal   increase  of  silver   and 

^  Gold  and  Silver  Commission,  1887.  But  see  article  by  Mr. 
Morison,  Btai,  Journal,  1902,  p.  513. 


THE  NINETEENTH  CENTURY.  99 

commodities  all  over  the  world  has  emphasised  this 
tendency. 

Now,  wages  in  Europe,  ultimately,^  are  adjusted  to\ 
changes  in  prices,  falling  when  prices  are  low  and 
rising  when  they  are  high  ;  but  there  is  a  very  strong 
tendency  for  the  effect  on  wages  to  linger  behind  the 
change  in  prices :  when  prices  rise,  wages  often  rise  less,  | 
as  was  the  case  in  factories  in  1812,  and  when  prices 
fall,  workmen  often  find  it  possible  to  continue  to  obtain 
wages  at  the  old  rate:  in  fact,  it  is  at  the  time  of 
falling  prices  that  it  is  most  easy  for  real  incomes  ('i.e., 
incomes  as  measured  by  purchasing  power)  to  in- 
crease ;  this  was  the  case  between  1815  and  1843,  and 
since  1870  the  increase  of  money  wages  has  been 
greatly  enhanced  by  the  fall  of  prices. 

The  result  is  that  in  England  and  the  rest  of 
Europe,  prices  measured  on  a  gold  basis  have  fallen, 
but  wages  have  not.  In  India,  prices  and  wages 
have  not  changed  their  relation  so  much.  ' 

Thus,  an  Indian  manufacturer  continues  to  obtain 
workmen  and  Indian  materials  at  the  same  rate, 
while  an  English  manufacturer,  paying  the  same 
wages  in  gold,  is  paying  more  in  real  value  ;  and 
the  prices  measured  in  gold  at  which  he  can  sell 
profitably  will  not  fall. 

For  instance,  if  an  Indian  manufacturer  paid 
twenty  rupees  for  work  done  in  1872,  and  sold  for 
twenty-five  rupees,  thus  making  25  per  cent,  profit, 
the  same  figures  will  represent  the  corresponding 
transaction  in  1892. 

But  reckoned  in  gold,  in  1872,  at  2s.  the  rupee,  he 
^  In  the  absence  of  causes  of  permanent  increase  or  decrease. 


100  ENGLAND'S  FOREIGN  TRADE  IN 

paid  £2  and  sold  for  £2  10s. ;  while  in  1892,  at  Is.  6d. 
the  rupee,  he  paid  £1  10s.  and  sold  for  £1  17s.  6d. 

The  European  manufacturer  meanwhile  has  to  pay 
the  same  gold  price  for  work  done  in  1892  and  1872  ; 

/thus,  when  Indian  and  English  goods  compete  in  a 
neutral  market,  the  change  in  exchange  value  gives 
India  a  distinct  advantagfe. 

The  fall  of  Id.  in  the  exchange  value  of  the  rupee 
gives  the  Indian  spinner  an  advantage  ^  of  about  ^^d. 
per  lb.  of  cotton.2  But  we  shall  presently  ^  see  that 
it  is  not  merely  this  cause  that  is  enabling  him  to 
compete  with  the  Manchester  manufacturer.  Just 
the  same  has  occurred  with  regard  to  Indian  wheat : 
the  Indian  grower  obtains  his  seed,  land,  and  labour 
at  the  old  silver  prices,  whereas  the  English  grower 
pays  (apart  from  other  disturbing  causes)  the  old 
gold  prices  ;  it  is  said  that  when  the  rupee  falls  Id., 
India  can  export  wheat  to  us  at  a  reduction  of  Is.  6f3. 
per  quarter  measured  in  our  money ;  but  this  is 
not  the  only  cause  that  regulates  the  importation  of 
Indian  wheat. 

It  should  be  clearly  understood  that  the  advantage 
comes  from  this  fact :  reckoned  in  purchasing  power, 
wages  of  English  labour   have   become  greater,  but 

k^wages  of  Indian  labour  have  not. 

It  must  be  observed,  however,  that  the  fall  is 
not  all  gain  to  India.  Debts  contracted  with  gold 
countries  must  be  paid  in  gold ;  that  is,  in  an  increased 
number  of  rupees.     Wages  in  any  way  dependent  on 

■I  Report  of  Manchester  Cotton  Spinning  Inquiry. 
2  Cotton  yarn  costs  about  2^d.  per  lb.  to  spin. 
^  Vide,  VI.  1  infra. 


THE  NINETEENTH  CENTUR  K 


.»old  must  be  increased  in  rupees.  In  the  case  of  the 
Indian  Civil  Service  and  the  Army,  just  and  bitter  com- 
plaints are  made  of  the  effects  of  the  fall.  Salaries 
are  paid  in  silver,  but  a  large  part  of  them  are 
spent  in  England  or  on  English  goods,  in  v^hich  case, 
now  that  fifteen  rupees  are  needed  to  obtain  a 
sovereign,  instead  of  ten,  as  was  the  case  when  the 
salaries  were  arranged,  Indian  salaries  lose  one-third 
of  their  value. 

Remembering,  however,  that  prices  as  a  whole  have 

fallen,  another  way  of  putting  the  same  thing  is  this : 

Indian  officers  and  civil  servants  have  not  benefited 

by  the  general  fall  in  prices,  whereas  their  compeers 

in  the  Home  Service  have. 

Hong-Kong  and  all  settlements  where  silver  is 
the  currency  have  suffered  in  just  the  same  way. 
Profits,  interest,  and  capital,  when  realised,  must  be 
transmitted  home  at  a  lower  value  and  consequent 
loss. 

It  is  not  within  our  scope  to  discuss  bi-metallism — 
that  is,  the  theory  that  by  universal  agreement  the 
ratio  between  gold  and  silver  can  be  fixed  and  kept 
constant — as  a  remedy  for  this  confusion.  The  objec- 
tions to  its  adoption  are  chiefly  based  on  the  apparent 
impossibility  of  coming  to  an  agreement,  and  the 
alleged  impossibility  of  preserving  the  fixed  ratio 
without  immense  loss;  it  is  also  contended  that  bi- 
metallism would  not  have  the  remedial  effects  that 
its  advocates  suppose. 

An  attempt  is  now^  being  made  by  the  Indian 
Government  to  introduce  a  gold  currency  into  India  ; 
1  July,  1893. 


102  ENGLAND'S  FOREIGN  TRADE  IN 

gold  has  been  made  the  standard  of  the  country. 
Silver  is  only  to  be  coined  at  Is.  4d.  the  rupee  (fif- 
teen rupees  to  the  pound  sterling) ;  rupees  are  still 
legal  tender,  and  internal  trade  will  not  be  affected ; 
but  it  is  hoped  that  a  reserve  of  gold  will  be  accumu- 
lated from  the  supply  known  to  be  hoarded  in  India, 
and  that  as  far  as  India  is  concerned  the  rupee  will 
be  kept  at  a  stationary  exchange  value,  to  which  all 
transactions  can  be  adjusted.     [See  Note  8,  p.  155.] 

4.  THE  STEADY  INCREASE  OF  VOLUME  OF  IMPORTS 
AND  EXPORTS,  AND  THE  PROPORTION  PER  HEAD 
OF  THE  POPULATION. 

The  effects  of  the  depression  which  began  in  1873 
must  not  be  exaggerated.  In  the  figures  of  total  im- 
ports and  exports,  as  published,  it  is  very  striking ; 
but  when  we  allow  for  the  general  and  continuous 
fall  in  prices,  which  took  place  concurrently  with  the 
decreased  value  of  imports,  we  find  that  the  amount 
(measured  in  goods,  not  in  money)  of  foreign  trade 
transacted  has  continually  increased.^ 

The  depression  affected  capitalists  and  their  profits, 
shook  credit,  checked  for  many  years  the  outflow  of 
capital  abroad,  and  made  employment  uncertain  for 
the  small  proportion  of  employes  and  workmen  who 
are  dependent  on  those  trades  which  fluctuate  in 
sympathy  with  foreign  disturbance  ;  but  the  amount 
of  cotton  imported  did  not  diminish,  wool  imports 
increased  steadily,  while  our  foreign  supply  of  wheat 
grew  faster  than  the  population. 

^  Vi^  Diaa;ram  vi. 


I- , 

TJIE  NINETEENTH  CENTUR  Y. 


103 


When  reduced  by  the  index  numbers  to  the  value 
of  1871,  which  is  the  fair  way  to  make  comparisons 
for  a  series  of  years,  the  import  and  export  figures 
are  these  :— 


Total  Imports  and  Exports. 

Year.  Millions  of  £. 

1870  547 

1873  682 

1876  631 

1879  611 

1882  719 

1885  642 

1888  685 

1890  748 

1895  703 


The  shipping  figures  show  a  similar  increase : — 


The  same  reduced  to  Gold 
Values  of  1871. 

Per  head  of 
Total.      Population. 

570           18 

613 

19 

664 

20 

736 

21-5 

856 

24-5 

891 

25 

980 

26-5 

1,070 
1,130 

28 
29 

Tonnage  of  Vessels  Entered 
Year.  and  Cleared  at  Ports  in 

United  Kingdom. 

1870  36  million 

1873  44  „ 

1876  50 

1879  52  „ 

1882  61 

1885  64  „ 

1888  68  „ 

1890  74  „ 

1895  80  „ 


Per  Head  of  Population. 

17 
21 
23 
23 

26 
26 
27 
30 
31 


»of  ^g  of  a  ton. 


The  close  resemblance  of  the  figures  in  the  two 
right-hand  columns  is  very  striking,  considering  that 
they  are  obtained  from  totally  different  sources  by 
difierent  methods.^     They  appear  to  show  that  the 

'  See  Econ.  Journal,  1897,  p.  277,  and  1903,  p.  629.  The 
correspondence  is  not  close  between  1895  and  1902. 

H 


104  ENGLAND'S  FOREIGN  TRADE  IN 

shipping  statistics  are  the  best  index  o£  the  volume 
(as  opposed  to  the  nominal  value)  of  foreign  trade. 
It  is  to  this  volume  that  we  must  look  when  we  are 
considering  the  benefits  of  our  trade  to  the  consumer. 
The  consumer  does  not  inquire  whether  trade  is  pro- 
fitable, or  brisk,  or  languishing.  He  may  be  interested 
in  that  when  he  is  considering  his  income*;  but 
in  making  his  purchase  his  only  concern  is  what 
proportion  the  price  bears  to  his  means. 

In  order  to  estimate  practically  the  proportion  of 
each  person's  income  which  is  used  for  purchases  of 
foreign  goods,  and  the  changes  of  that  proportion, 
many  data  are  necessar}^  First,  the  total  value  of 
imports  ;  secondly,  the  proportion  of  raw  materials  to 
goods  for  consumption  ;  and  thirdly,  the  population  at 
every  date,  whence  the  value  per  head,  both  of  raw 
and  other  goods,  is  found.  These  figures  can  be 
estimated  approximately.  This  value  must  next  be 
reduced  by  index  numbers  to  some  standard  year, 
and  we  then  have  found  the  quantity  of  goods  im- 
ported for  each  person.  This  quantity  has  continually 
increased  from  1840  till  the  present  date.  It  increased 
rapidly  from  1855  till  1872  ;  was  checked,  but  hardly 
diminished,  before  the  commencement  of  the  depres- 
sion in  values;  and  from  1876  onwards  has,  not- 
withstanding fluctuations  and  depressions  in  values, 
steadily  grown.     [This  is  still  the  case,  1905.] 

We  have  thus  very  definite  evidence  that  these 
depressions  do  not  afiect  the  consumer  to  his  dis- 
advantage ;  goods  are  ofiered,  rather,  at  reduced  prices, 
and  with  his  former  expenditure  he  obtains  more  of 
them.      Benefiting  the  consumer  at  the  expense   of 


THE  NINETEENTH  CENTURY.  105 

the  producer  has  in  the  mass  the  paradoxical  effect  of 
benefiting  the  nation  at  its  own  expense,  for  con- 
sumers are  in  most  cases  also  producers;  but  by  a 
depression  certain  classes  of  incomes  are  greatly 
diminished,  while  at  the  same  time  the  spending 
power  of  all  incomes  is  slightly  increased. 

It  does  not  follow  that  depressions  are  good  for 
commerce  or  for  the  production  of  wealth.  A  regular 
progress  of  trade  would  give  all  the  advantages 
which  appear  to  come  from  a  depression,  without  the 
dislocation  of  trade  and  the  loss  to  individuals. 

There  are  still  other  data  necessary  before  an 
accurate  estimate  of  the  growing  importance  of 
foreign  trade  is  possible.  We  must  know  the  total 
expenditure  before  we  know  the  proportion  spent  on 
foreign  goods,  as  we  must  know  the  total  amount  of 
goods  produced  before  we  can  tell  what  proportion  of 
our  energy  is  spent  in  producing  goods  for  export. 
Unfortunately,  it  is  not  possible  to  obtain  these 
facts ;  statistical  knowledge  is  not  far  enough 
advanced. 

As  far  as  is  known,  the  facts  in  1904  are  some- 
thing like  the  following : — The  total  income  of  the 
country  is  now  £1,800,000,000  per  annum,  or  about 
£42  per  head.  The  total  expenditure  is  not  known, 
but  perhaps  £6  per  head  (some  £250,000,000  for  the 
country)  is  saved,  while  £36  is  spent.  Of  this,  £5 
goes  for  imported  food,  £3  for  imported  manufactures, 
and  £3  for  raw  materials,  of  which  part  is  used  for 
manufactures  for  home  consumption. 

As  regards  real  incomes  —  that  is,  wages  or 
salaries  reckoned  by  their  purchasing  power — their 


io6  ENGLAND'S  FOREIGN  TRADE  IN 

improvement  bas,  but  for  very  sbort  periods,  been 
continuous  since  1775. 


From  1775  to  1815  prices  rose,  but  incomes  rose  still  more. 
From  1820  to  1851    prices   fell   35   per   cent.,  while   incomes 

remained  nearly  steady. 
From  1851  to  1873  prices  rose  50  per  cent.,  but  incomes  rose 

60  per  cent. 
From  1873  to  1895  prices  fell  45  per  cent.,  while  incomes  fell, 

but  rose  again  to  the  1873  level. 
From  1895  to  1901  prices  rose  12  per  cent.,  but  incomes  rose 

15  per  cent. 


Combining  these  and  similar  figures,  we  have- 


AVERAGE   INCOME    CORRECTED    BY    WHOLESALE   INDEX  NUMBERS, 
AND   EXPRESSED   AS   PERCENTAGE   OF   THE   HEIGHT  IN   1901. 

1820     1851    1871     1873     1881     1891    1895    1901 
35        45        54        55        67        84        98       100 


These  figures  must  not  be  used  indiscriminately. 
They  merely  state  that  with  the  average  income  there 
could  be  obtained  in  1901  three  times  as  much  of 
many  of  the  commodities  commonly  consumed,  directly 
or  indirectly,  as  could  be  obtained  with  the  average 
income  in  1820  ;  and  similarly  for  other  years.  But 
many  important  items  of  expenditure  or  cost  are 
not  taken  into  account ;  e.g.,  rent,  the  value  of  land, 
the  difi'erence  between  wholesale  and  retail  prices,  the 
price  of  personal  services,  rendered  directly  or  by 
ofiicials.  The  inclusion  of  these  would  probably 
diminish  the  rate  of  increase. 

We  can  from  the  above  figures  and  the  statistics 


THE  NINETEENTH  CENTURY. 


107 


of  Imports  and  Exports  obtain  the  following  rough 
table : — 


CORRECTING  GOLD  VALUES  BY  INDEX  NUMBERS,  SO  AS  TO  OBTAIN 
A  CONSTANT  STANDARD,  m.  :  VALUE  OP  GOLD  IN  1901. 


Average  Income. 

Spent  on 

Imports. 

Average  Sum. 

Percentage  of 
Total. 

1820 

£15 

£0-8 

6 

1851 

19 

3-3 

17 

1871 

23 

5-3 

22 

1881 

28 

7-0 

25 

1891 

35 

9-0 

26 

1902 

42 

10-8 

26 

We  thus  see  that  the  quantity  of  imports  for  each 
person  has  steadily  increased ;  but  that  the  fraction 
of  real  income  spent  on  imports  has  increased  little 
since  1871. 


loS  ENGLAND'S  FOREIGN  TRADE  IN 


VL— ENGLAND'S  PRESENT  POSITION. 

1.  THE  PRESENT  POSITION  OF  ENGLAND'S  GREAT  TRADES. 

We  have  now  reviewed  briefly  the  most  important 
events  which  have  affected  our  foreign  trade  durincj 
the  nineteenth  century,  and  the  most  striking  features 
of  its  growth,  and  are  in  a  position  to  estimate  the 
relative  importance  of  her  greatest  industries,  and  to 
point  out  the  circumstances  which  influence  her  hold 
on  them. 

It  may  be  convenient  to  adopt  the  divisions  used  by 
the  Labour  Commission,  viz. : — 

1.  Minerals  and  hardware. 

2.  Textiles. 

3.  Transport. 

1.  Both  the  coal  and  iron  trades  are  now  in  a  state 
of  transition.  [See  Notes  6  and  7,  pp.  152-4.] 
^  In  1840  coal  formed  only  1*1  per  cent,  in  value  of 
our  total  exports  ;  this  proportion  has  steadily  in- 
creased, and  in  1891  had  reached  more  than  8  per 
cent,  of  our  exports  of  home  produce;  about  one- 
tenth  of  this  is,  however,  exported  for  use  by  our  own 
steamers.  Goal  is  therefore  an  important  part  of 
our  trade,  but  it  is  evident  that  its  importance  cannot 
extend  through  more  than  one  or  two  generations 


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THE  NINETEENTH  CENTURY,  109 

under  the  most  favourable  estimate  of  our  coal  re-  \ 
sources,  unless  totally  new  fields  are  discovered.     It 
seems  probable  that  after  a  short  time  the  increasing 
depth  from  which  coal  must  be  obtained  will  add  to  ; 
its  cost  and  diminish  its  production,  that  a  larger  pro-  I 
portion  will  be  needed  for  the  home  demand,  which, 
considering  the  cost  of  transport  and  the  probable  | 
development  of  foreign  supplies,  will  be  stronger  than 
the  foreign  demand,  and  that  the  first  effect  of  in- 
creased difficulty  in  raising  coal  will  be  felt  in  our  j 
foreign  trade. 

After  the  experience  of  this  century,  however,  with 
its  many  startling  and  unforeseen  developments,  it 
is  unsafe  to  lay  stress  on  any  cause  which  may 
produce  no  effect  for  twenty  or  thirty  years.  This 
caution  is  especially  needed  in  the  face  of  the  pessi- 
mistic cries  that  we  must  lose  our  trade  entirely  when 
oar  coal  verges  towards  exhaustion ;  for  besides  the 
fact  that  coal  is  only  one  of  the  important  factors  of 
our  commercial  supremacy,  we  may  reasonably  expect 
that  the  increasing  stimulus  which  the  rising  price 
would  supply  will  produce  inventions  towards 
economy  in  its  mining  and  use,  and  that  before  the 
conclusion  of  the  time  allowed  by  our  prophets  for 
the  exhaustion  of  coal,  other  motive  powers — water, 
electricity,  gas,  or  oil  may  be  brought  into  practical 
utility. 

Steel  and  iron  have  in  the  same  way  as  coal  had^ 
much  to  do  with  establishing  our  pre-eminence  com- 
mercially, and  have  had  a  continuous  and  changing  I 
effect  on  our  foreign  trade  relations. 

It  was   by   these    exports    that   we    became    the 


ENGLAND'S  FOREIGN  TRADE  IN 


creditors    of    the   world,   during    the    two    eras    of 
foreign  railway  construction,  1853-57  and  1870-73. 

Looking  at  the  proportion  that  the  value  of  iron 

and  steel  exported  bears  to  the  total  value  of  exports 

of  home  produce,  we  find  that  it  was  about  3  per  cent. 

in  1840,  that  it  rose  to  a  maximum  of  8*6  per  cent,  in 

1854,  fell  to  5'3  per  cent,  in  18G6,  rose  again  to  9*8  per 

J  cent,  in  1873,  returning  to  5  per  cent,  in  1884-6.    The 

I  quantities   exported  would,  of   course,  give   totally 

-  different  figures,  for  it  is  notorious  that  iron  and  steel 

i  fluctuate  in  price  violently  as  the  demand  rises  and 

falls.     The  output  cannot  be  increased  or  diminished 

indefinitely  at  short  notice,  and  rising   prices   have 

frequently    been    further     raised     by    strikes     and 

combinations  of  workmen. 

The  proportion  of  our  production  of  steel  and  iron 
to  that  of  the  world  is  diminishing.  [See  Note 
6,  p.  152.] 

The  production  of  pig-iron  and  steel  has  been — 


(In  Thousands  of  Tons.) 

I860. 

1870.            1880.            1885. 

1889. 

England, 

.     3,830 

5,960      7,750      7,420 

8,250 

United  States, 

820 

1,670      3,840      4,050 

7,600 

Other  countries. 

.     2,530 

4,280      6,550      7,630 

9,310 

Total,      .      7,180    11,910    18,140    19,100    25,160^ 

The  necessity  for  importing  ores  for  subsidiary  pro- 
cesses and  the  gradual  exhaustion  of  our  own  mines, 
together  with  the  development  of  foreign  mines, 
naturally  account  for  this.  Since  one  of  our  great 
advantages  in  this  manufacture  is  the  nearness  of  our 
^  Mulhall's  "Dictionary  of  Statistics." 


THE  NINETEENTH  CENTURY.  ill 

coal  to  our  iron  and  to  the  sea,  it  will  be  seen  that  any  | 
rise  in  the  price  of  coal  must  have  a  ^reat  effect  in  j 
handicapping  us  in  the  manufacture  of  iron  and  steel.  \ 

It  is  not  unlikely  that  the  minerals,  which  have  ' 
helped  so  much  to  give  us  the  supremacy  which  we 
have  hitherto  enjoyed,  will,  by  the  natural  process  of 
exhaustion  of  old  mines  and  development  of  new,  a 
process  which  no  laws  or  organisation  can  possibly 
stop,  become  in  the  not  distant  future  a  less  important 
branch  of  our  trade.  But  there  is  no  reason  to  think.  • 
that  English  energy,  denied  outlet  in  this  direction, 
will  therefore  be  unused;  we  have  other  manufac- 
tures, continually  growing  in  number,  which  may  well 
dwarf  our  exports  of  coal  and  iron  (amounting  as  they 
do  to  less  than  22  per  cent,  of  our  whole  exports) ; 
we  are  not  dependent  on  any  one  branch  of  trade. 

Supposing  all  this  trade  lost  in  twenty-two  years,  a 
very  improbable  event,  it  would  only  mean  the  annual 
loss  or  transfer  of  1  per  cent,  of  that  fraction  of  our 
whole  capital  and  labour  which  is  employed  in  foreign 
trade,  a  less  calamity  than  a  bad  harvest  early  in  the 
century  or  a  destructive  war  now.  Even  when  we 
add  to  this  the  possible  increased  cost  in  general 
manufacturing,  not  incurred  by  our  foreign  rivals  (no 
very  great  increase,  for  in  the  cotton  trade  coal  only 
accounts  for  one-fiftieth  part  of  the  whole  cost  of 
manufacture),  there  is  no  great  cause  for  alarm ;  in 
thus  estimating  future  losses,  we  are  endeavouring 
to  forecast  the  future  of  trade  in  a  way  which  the 
experience  derived  from  the  changes  of  this  century 
should  show  us  to  be  unwise. 

The  moral  is  that  every  effort  should  be  made  to  | 


112  ENGLAND'S  FOREIGN  TRADE  IN 

i  widen   the   basis   of   our   trade,   and    this   we   shall 
'  shortly  see  is  continually  being  done. 

2.  The  textile  manufactures  bring  more  distinctly 
before  us  the  effect  of  other  nations  undertaking  for 
themselves  what  hitherto  has  been  done  for  them 
by  us.     [See  Notes  4  and  5,  pp.  151,  152.] 
/    The  causes  that  have  made  England  the  seat  of  the 
j  cotton  manufacture  are  not  quite  as  obvious  as  those 
j  which  give  us  coal  and  steel.     The  factors  that  would 
naturally  seem  of  importance  are  nearness  to  the  raw 
material,  to  coal  and  to  supplies  of  machinery,  and 
the  command  of  organised  and  skilled  labour.    Taking 
these  in  order  : — The  carriage  of  cotton  has  been  so 
wonderfully  reduced  that,  as  we  have  seen,  distance 
from  the  supply  makes  little  difference.     Coal  is  not 
a  large  item  in  the  expense  of  manufacturing;  our 
supply  has  been  better  than  that  of  competing  nations, 
but  we  appear  to  be  losing  this  advantage.     We  have 
long  enjoyed  complete  command  of  the  best  machinery ; 
but  other  nations  are  acquiring  the  necessary  know- 
ledge and  skill  to  supply  themselves.      Our  power 
,  rests  on  the  immense  capital  permanently  invested, 
I  on  the  long,  continuous  training  of   workmen   and 
;  masters   in   skill    and    management,   on    our    damp 
climate,  which  aids   the   process,  and  on   our  long- 
established  supremacy. 
/     Our  possession  of  the  cotton  and  transport  trades 
will  at  first  sight  puzzle  future  students  ;  but  it  is  not 
difficult  to  trace  the  events  which  gave  us  the  former. 
When  America  had  her  crop  to  export,  and  wished  to 
obtain  manufactures  in  return,  we  were  (and  till  long 
afterwards)  supreme   in  manufacturing;    wool  gave 


THE  NINETEENTH  CENTURY.  ii3 

US  cotton  ;  cotton  ^ave  us  factories ;  factories  gave 
foreign  trade  ;  foreign  trade  brought  us  more  cotton.  ' 
The  question  as  to  how  long  we  shall  keep  command 
of  the  cotton  trade  is  not  so  easy  to  answer,  nor  is  it 
essential  to  answer  it.  It  is  not  likely  that  we  shall 
lose  it  suddenly,  for  it  would  necessarily  take  years 
of  accumulation  before  the  necessary  plant  could  be 
ready  elsewhere.  If  the  course  of  trade  does  prove 
that  other  countries  can  be  more  cheaply  supplied  by 
themselves  than  by  us,  then  we  must  gradually  divert 
our  energy  to  trades  that  will  pay,  or  to  producing  at 
home  those  things  which  we  now  obtain  in  exchange 
for  cotton  goods. 

What  has  happened  is  that  our  exports  of  cotton^ 
have  (allowing  for  fluctuations)  increased  in  quantity,  j 
remained  stationary  in  value,  and  diminished  in  pro- 
portion to  our  whole  exports;  and  that  other  countries 
have  begun  to  manufacture  for  themselves,  to  supply 
their  own  increasing  wants,  and  have  exported  to 
other  markets  quantities  which  are  small,  except  in 
the  case  of  exports  from  the  United  States  to  China, 
and  Central  and  South  America,  and  from  France  to 
Algeria  and  Indo-China. 

The  followino:  are  the  figures  of  our  trade  : — 

O  CD 

EXPORTS   OF   COTTON   YAKN   AND   MANUFACTURES. 

Percentage  of 
whole  exports 
Value  of  total     of  British  and 
Year.  Piece  Goods.  Yarn  &  Thread.    Cotton  Exports.  Irish  Produce. 

1861  2,563  million  yds.  183  million  lbs.  £46,872,489         37 
1870  3,266  „  193  „  £71,416,345         35 

1880  4,495  „  228  „  £75,564,056         34 

1890  5,124  „  276  „  £74,730,749        28 


114  ENGLAND'S  FOREIGN  TRADE  IN 

^  The  Indian  manufacture  is  a  very  important  factor 
\  in  the  immediate  future  of  this  trade.  India  has  pro- 
duced and  worked  up  cotton  for  ages,  but  factories,  in 
the  present  sense  of  the  word,  were  not  started  till 
after  the  time  of  the  American  Civil  War.  These 
factories  have  the  obvious  advantage  of  saving  the 
double  transport  of  cotton  and  yarn.  It  was  reckoned 
from  the  state  of  the  trade  in  1888  ^  that  the  Indian 
had  in  1872  an  advantage  of  IJd.  a  lb.  over  the 
Lancashire  spinner  from  this  cause. 

He  was  further  helped  by  a  duty  on  imported  yarn, 

and  after  some  reverses  was  able  to  obtain  a  firm 

hold  on  first  the  Indian  and  then  the  Chinese  and 

Eastern  market.     He  is  hindered  by  having  to  import 

coals    and   machinery,   though   the   development   of 

Indian   coalfields   will   probably   soon    cheapen    his 

}   supply  ;  while  the  English  spinner  has  been  benefited 

by  the  great  reduction  of  freights  already  mentioned, 

by  which  the  Indian  advantage  is  reduced  by  IxVd.  per 

j  Ib.^   Again,  he  has  been  helped  by  the  fall  in  exchange,^ 

I  which  it  is  reckoned  has  yielded  a  gain  of  ^  d.  per  lb., 

I  while  the  rupee  fell  from  2s.  to  Is.  7d.^  and  an  increased 

^gain  on  its  further  fall.     Now   that   the   exchange 

value  of  the  rupee  has  been  fixed,  he  will  retain,  but 

not  increase,  this  advantage  in  India,  while  for  China 

and  the  East  it  may  continue  to  vary. 

The  continual  fluctuations  of  the  exchange  have 
!  also  been  a  handicap  on  Lancashire,  for  when  the 
a'upee  suddenly  falls  Id.,  no  immediate  difierence  is 

'^  The  following  figures  are  taken  from  the  *'  Manchester 
Cotton  Spinning  Inquiry." 

2  VidjQ  p.  92  6Vjj)Ya.  3  Fic?e  V.  3  sujpra. 


THE  NINETEENTH  CENTURY.  115 

felt  by  silver-using   manufacturers.     They   can   sell? 
without  loss  at  the  old  price ;  but  the  Lancastrian,  1 
having  all  his  expenses  measured  in  gold,  must  suffer 
the  whole  loss,  or,  as  more  often  happens,  postpone 
his  sale  till  matters  have  got  adjusted.     Raw  cotton 
immediately  rises  to  the  English  price  for  all  concerned; 
coal  and  other  materials  imported  into  India  have  ; 
soon  their  effect  in  raising  their  fraction  of  the  cost  ; 
of  manufacturing  to  the  gold  value ;  so  that  after  a 
short  time  the  Indian  advantage  is  reduced  to  the 
small  fraction  due  to  wages  (less  than  J^d.  per  lb.  for 
each  fall  of  Id.),  and  the  English  business  can  be 
carried  on. 

The  result  is  that  at  present  in  the  actual  manufac- 
turing and  placing  in  the  market,  the  Indian  spinner 
has  a  pull  over  his  English  rival  of  about  Jd.  per  lb. 
in  Japan,  China,  and  Hong-Kong,  and  |d.  in  India,^  and 
is  not  hindered  by  fluctuations  in  exchange. 

Under  these  circumstances,  the  thing  to  be  wondered 
at  is  that  India  has  not  gained  more  of  our  trade. 
That  she  has  obtained  a  great  part  of  the  cotton  trade 
with  the  East  is  shown  by  the  following  table : — 

EXPORTATIONS   OF   COTTON   YARNS   TO   CHINA,   HONG-KONG, 
AND   JAPAN. 


From  India. 

From  England. 

1876 

8  million  lbs. 

29  million  lbs. 

1880 

26 

46 

1884 

65 

38 

1887 

113 

35 

1890  2 

...           ,, 

38 

^  Indian  advantage  in  1872,  l^d.  :  subtract  li'o^.,  due  to  fall  in 
freights  :  add  ^^d.,  due  to  fall  in  exchange  :  we  get  Vq^-j  which  is 
the  present  advantage  (nearly)  \_i.e.  in  1893.] 

-  Exact  figures  not  stated  ;  but  value  of  total  goods  exported 
to  these  countries  has  increased.  It  is  therefore  probable  that 
the  figure  is  greater  than  113.     [See  Note  4,  p.  151.  ]j 


Ii6  ENGLAND'S  FOREIGN  TRADE  IN 

But  the  only  trade  she  has  is  in  coarse  yarns,  and 
there  does  not  seem  any  immediate  prospect  of  her 
succeeding  in  obtaining  any  other  branch  of  the 
trade. 

Between  1870  and  1886  our  exports  of  yarn  and 
piece  goods  to  India  increased  considerably. 


QUANTITIES  EXPORTED   TO  THE   BRITISH   EAST  INDIES 
OF  COTTON. 


Piece  Goods. 

Yarns. 

Piece  Goods. 

Yams. 

Year. 

Million  yds. 

Million  lbs. 

Year. 

MiUion  yds. 

Million  lbs, 

1850 

314 

21-0 

1890 

2,190 

52-5 

1860 

825 

30-7 

1893 

1,982 

39-9 

1870 

923 

31-0 

1896 

2,152 

52-0 

1875 

1,231 

32-5 

1899 

2,320 

41-4 

1880 

1,813 

47-1 

1900 

2,019 

33-6 

1883 

1,800 

45-3 

1901 

2,372 

37-9 

1886 

2,238 

49-8 

1902 

2,123 

32-5 

This  increase  in  value  implies  a  much  greater  increase 
in  quantity. 

Other  textiles  must  be  passed  by  rapidly. 

The  woollen,  our  oldest  trade,  continues  to  hold  an 
important  position.  Our  home  production  of  raw 
wool  remaining  stationary  or  slightly  diminishing, 
our  importations  have  increased  with  immense  strides 
to  supply  the  growing  demand  at  home  and  the  in- 
creasing quantities  needed  for  export.  The  price  of 
wool  has  fallen  in  the  same  way  as  cotton  and  general 
commodities ;  and  in  spite  of  this  increase  in  quantity, 
the  value  of  exports  has  hardly  changed.  [See  Note 
5,  p.  152.] 

Jute,  which  has  only  been  of  importance  since  1860, 


THE  NINE  TEE  NTH  CENTUR  Y.  117 

and  has  since  then  been  of  great  value  to  Indian  trade, 
has  been  manufactured  in  increasing  quantities  in  , 
England,  and  has  counterbalanced  the  great  diminu- 
tion of  flax-spinning  which  German  competition  has 
caused  in  Ireland ;  so  that  the  total  exportation  of 
jute  and  linen,  yarn  and  manufactures,  have  remained 
stationary  in  value,^  increasing  in  quantity,  and 
diminishing  in  proportion  to  our  whole  trade. 

Thus  in  all  textiles  our  trade  has  grown,  in  that  we'v 
continually  increase  our  exports  in  bulk,  and  (all  \ 
prices  falling)  obtain  more  in  return.  That  is,  we  ' 
tend  to  possess  a  smaller  fraction  of  the  world's  manu-  \ 
facturing  trade ;  but,  nevertheless,  our  exports  continue 
to  grow  in  value,  as  measured  by  other  goods,  and  in  '• 
quantity.^     [See  Notes  4  and  5,  pp.  151,  152.] 

After  deducting  all  coal,  metals,  steel,  machinery, 
and  also  all  textile  manufactures  from  our  total  ex- 
ports, there  is  a  continually  growing  residuum  of 
miscellaneous  goods,^  which  have  an  important  bearing 
on  the  aspects  of  foreign  competition.^ 

Taking  a  final  review  of  our  important  trades,  as\ 
shown  by  the  well-known  figures  of  the  past  few  \ 
years  and  the  current  facts  and  guesses  about  future  j 
probabilities,  w^e  see  that,  owing  to  the  increasing  cost  j 
of  coal  almost  certain  to  arrive  sooner  or  later,  our  \ 
iron  and  steel  trade,  depending  on  the  nearness  of  \ 
coal  to  so  great  an  extent,  must  continue  to  sink  in  \ 
comparison  with  the  world's  supply.     With  cotton,  on  ^ 

^  I.e.,  value  reckoned  in  £  s.  d. 

2  Diagram  vi.  illustrates  this. 

3  Diagram  vii. ,  line  C. 
*  See  next  section. 


ii8  ENGLAND'S  FOREIGN  TRADE  IN 

the  other  hand,  the  advantages  of  skill  and  establish- 
ment remain,  but  no  longer  as  our  monopoly  ;  other 

;   nations  are  acquiring  both.     We  have  the  start,  and 

\  may  keep  the  lead,  but  not  easily.  Moreover,  our 
third  advantage,  cheap  and  good  coal,  may  pass,  and 

I  though  continental  nations  may  be  worse  off  than  we 
for  coal,  India  is  developing  her  coalfields,  and  the 
United  States  has  large  supplies  for  herself.  So  far 
we  have  only  lost  part  of  our  trade  in  coarse  yarns  ; 
it  remains  to  be  seen  whether  fine  yarns  will  also 
pass  from  us. 

The  possibilities  are  that  the  United  States  will 
extend  her  hold  over  China,  the  Continent  and  India 
continue  to  supply  their  increasing  wants,  and  India 
to  press  us  in  the  East ;  while  our  trade,  contracted 
in  some  directions,  may  expand  in  Africa  or  elsewhere. 
We  may  therefore  conclude  that  there  is  no  immediate 
fear  of  our  cotton  trade  rapidly  failing  us.  Old  causes 
continue  to  help  us,  and  new  ones  affect  others  as  well 
as  ourselves,  and  their  action  must  be  gradual. 

Meanwhile,  remembering  that  it  has  never  in  this 
century  been  possible  to  look  ten  years  ahead,  that 
the  last  things  that  can  be  foreseen  are  a  new  inven- 
tion (such  as  the  application  of  electricity),  or  a  new 
trade  (like  the  jute  manufacture),  and  that  our  only 
safe  premise  is  that  any  influence  displacing  capital 
from  textile  factories,  or  reducing  the  price  of  cotton 
goods,  will  supply  a  stimulus  for  finding  new  em- 
ployments for  capital  and  new  inventions  towards 
economy,  we  need  not  give  heed  too  readily  to  fears 

i  that  coal  and  competition  are  ruining  the  cotton  trade 

l^f  the  country. 


THE  NINETEENTH  CENTURY.  119 

3.  If  we  exported  nothing,  the  services  of  our  ships 
(our  "  invisible  exports  ")  would  pay  for  imports  to 
the  amount  of  £90,000,000,^  and  rank  us  at  once  as  a 
second-rate  trading  power,  with  only  France,  Germany, 
United  States  (America),  Holland,  Belgium,  and  Austria  ) 
ahead. 

There  is  no  need  to  dwell  long  on  our  shipping^ 
when  we  have  once  realised  its  importance,  because 
there  is  no  doubt  or  immediate  danger  about  our 
supremacy  in  this  direction.  The  earnings  of  our  \ 
merchant  service  from  foreign  powers  are  as  great  as 
the  value  of  our  cotton  exports,  and  this  is  a  trade  on 
whose  continuance  we  can  depend. 

The  figures  of  the  merchant  navies  of  different 
countries  are  so  striking  that,  though  well  known, 
they  must  be  given. 

Merchant  navies  (sailing  and  steam)  of — 

1902 
1,000  tons. 

United  Kingdom, 10,055 

Colonies  and  Dependencies  of  United  Kingdom,    .  1,512 

Norway, 1,451 

Germany, 2,204 

France, 1,218 

Italy, 1,019 

Japan, 944 

United  States  (Foreign  Trade),      ....  883 

„            (for  Lake,  River,  and  Home  Trade),  4,915 

The  last  item  illustrates  what  fifty  years  ago  would '  • 
have  seemed  the  greatest  danger  to  our  supremacy,  j 

^  The  exact  figures  cannot  be  given;  this  is  the  estimate  used 
by  the  Board  of  Trade,  Cd.,  1761,  p.  101. 


t2o  ENGLAND'S  FOREIGN  TRADE  IN 

The  United  States,  with  their  immense  stretch  of  sea- 
board and  their  supply  of  timber,  might  have  been 
expected  to  show  their  Saxon  descent  by  building  the 
largest  navy  in  the  world,  and  their  enormous  inland 
fleet  shows  their  capabilities,  but  in  about  1866  it 
was  decided  otherwise. 

By  the  North  and  South  war  they  were  prevented 
from  taking  part  in  the  building  of  steamers,  which 
was  then  making  great  progress,  and  at  the  end  of 
the  war  their  tariff  prevented  a  cheap  supply  of  steel, 
which  was  rapidly  becoming  of  importance ;  so  that, 
while  our  merchant  fleet  became  year  by  year  of 
greater  efficiency,  and  while  we,  by  the  rapid  con- 
struction of  vessels  that  could  undertake  the  new 
Suez  Canal  trade,  laid  the  foundation  of  our  modern 
fleet,  the  American  shipyards  rapidly  became  empty. 

/  As  it  is,  we  (including  our  colonies)  own  half  the 
ocean  service  of  the  world,  and  have  built  a  new  fleet 

\  of  740,000  tons  for  ourselves,  and  of  180,000  tons  for 
foreigners  annually  on  an  average  in  1899-1903,  while 

I  there  is  hardly  a  nation  in  the  world  that  does  not 

I  employ  our  ships  for  the  transport  of  their  goods. 

2.   EXPORTS   AND   FOREIGN   COMPETITION. 

/  In  any  question  affecting  the  permanence  or 
changes  of  our  foreign  trade,  it  is  the  distribution 
and  nature  of  our  exports  that  we  must  study.  For 
the  payment  of  our  exports  ultimately  we  obtain 
goods,  not  money ;  but  immediately  the  dealer  obtains 
a  bill  of  exchange,  which  answers  the  same  purpose 
as  money,  and  with  which  any  goods  can  be  obtained 
from  any  country.     These  transactions  in  the  mass, 


THE  NINETEENTH  CENTURY. 


with  the  mechanism  of  the  exchanges,  must  balance 
each  other.  The  important  point  to  notice  is  that, 
given  a  market  for  exports,  we  may  get  exactly  what 
we  please  in  return. 

The  following  table  shows  the  present  distribution 
of  our  exports. 

Exports  to  the  following  countries  of  British  and 
Irish  produce — 


1891. 

1903. 

India  and  Ceylon, 

.    £31  million. 

£34  million. 

Australia  and  New  Zealand, 

26      „ 

22 

North  America, 

. 

V      „ 

11        „ 

Other  British  Possessions, 

.     £ 

22 

43 

Total  British  Possessions, 

86  million. 

£110  million. 

1891 

1903. 

United  States,  America,    .       £ 

11  million. 

£22 

million. 

Europe,        .... 

54       , 

101 

>) 

Central  and  South  America, 

19      , 

22 

China  and  Japan, 

9      , 

12 

,, 

Other  Foreign  Countries    .        .  22      , 

161      „ 

19 

„ 

Total  Foreign  Countries,     . 

.    £ 

176       „ 

Total  Exports,    . 

247  million 

£286  million. 

EUROPE. 

1891. 

1903. 

Germany, 

^ 

Holland, 

. 

£35 

million.  1 

£40  million. 

Belgium, 

J 

France, 

16 

J5 

16         „ 

Italy,             .         . 

6 

5) 

8         „ 

Spain  and  Portugal 

7 

)) 

7         „ 

Russia, 

5 

5? 

9         „ 

Sweden  and  Norway     . 

.} 

7 

11         „ 

Denmark  and  Iceland  . 

)» 

Other  European  Count] 

"ies, 

8 

5) 

10 

£84  million. 

£101  million. 

^  Grouped  together  because  part  of  the  exports  to  Holland 
and  Belgium  are  re-exported  to  Germany. 


122 


ENGLAND'S  FOREIGN  TRADE  IN 


Thus  we  see  that  India  is  our  best  customer, 
followed  at  no  great  distance  by  the  United  States, 
Germany,  and  Australia ;  and  that  we  export  about 
equal  quantities  to  the  whole  of  our  possessions  and 
to  Europe. 

Next  let  us  notice  in  what  way  the  proportions  of 
our  exports  to  different  districts  have  been  changing. 


EXPORTS   OP  BRITISH   AND   IRISH   PRODUCE. 


1S60 

1870 

1S8C 

1891 

1903 

(U 

1) 

ai 

<o 

1    « 

1 

bo 

60 

60 

to 

1 

1 

1 

1 

> 

4> 

> 

g 

> 

53 

> 

> 

« 

Ph 

P 

Hh 

Ph 

■  Ph 

MilHon 

MilHon 

MilUon 

MilHon 

Million  1 

To  Europe, 

;^45 

33 

;C76 

38 

m 

37 

;^84 

34 

£m.    j  35 

„  United  States,      - 

21 

16 

28 

14 

30 

13 

27 

11 

22     1     8 

,,  British  Possessions, 

43 

32 

61 

26 

75 

34 

86 

35 

110       38 

,,  Other  Countries,  - 

26 

19 

44 

22 

36 

16 

50 

20 

53       19 

Total 

^13 

100 

;C199 

100 

;^223 

100 

;^247 

100 

;^286     100 

A  glance  at  these  tables  shows  first  that  the  dis- 
tribution of  our  exports  is  co-extensive  with  the 
world;  and  secondly,  that,  divided  on  the  broadest 
lines,  in  spite  of  all  changes,  the  percentages  of 
exports  to  the  same  group  have  remained  almost 
unchanged. 

We  will  briefly  consider  the  meaning  of  these 
figures.  Our  possessions  only  take  one-third  of  our 
exports,  and  this  proportion  shows  no  signs  of  a  rapid 
increase  at  present ;  nor  is  there  any  sign  of  decrease. 
Natural  causes  and  the  freedom  of  trade  have  fixed 
this  proportion.     In  forty  years  these  exports  have 


DIAGRAM    Vm 
shorn n^  Distribution  of  Exports  of  British  and  Irish  Produce. 
Quinquennia/  averages  given  For  Periods  ^9-5Z,  55  -57, 58-62, 65-67, 68-72 

^^^^^^^^^^_^  75 - 77,  76  62,83-67,  88-92,95-97,98- OZ  , 
JlMillionsl 


BRITISH 
POSiiiSIONS 


ZSVoof 
TOTAL  EXPORTS 
OF  BfilTISH 
PROOUC£ 


AUST/iAUA 
CSRMAKY 


USA 
FHANC£ 


THE  NINETEENTH  CENTURY  123 

more  than  doubled  in  value,  and  we  have  the  satis- 
faction of  seeing  both  branches-  of  our  trade  pro- 
gressing with  equal  rapidity.     [See  Note,  p.  149.] 

It  is  important  to  realise  this  when  any  scheme  of 
Imperial  federation  is  under  discussion.  Any  customs 
union,  or  commercial  arrangement  with  our  colonies, 
must  be  an  artificial  fostering  of  our  colonial  relatively 
to  our  other  trade.  Surely  the  first  lesson  of  these 
figures  is  that  colonial  trade  is  only  of  the  same  im- 
portance as  European,  that  during  the  vicissitudes  of 
thirty  years  their  progress  has  been  the  same,  and 
that  any  tampering  with  the  one  in  a  way  which 
may  injure  the  other  can  hardly  be  an  advantage  to 
the  whole. 

That  is  the  first  lesson  of  these  figures  ;  but  it  is,  of 
course,  a  very  small  part  of  the  considerations  to  be 
taken  into  account  when  dealing  with  our  colonial 
empire,  which  we  will  briefly  mention  without 
discussion. 

In  the  future,  are  our  kinsfolk  abroad  likely  to 
show  marked  preference  for  deaiing  with  England, 
when  trade  with  other  countries  is  equally  or  more 
profitable,  and  will  the  greater  facilities  of  intercourse 
in  trading  with  a  nation  of  the  same  language  and 
customs  bring  us  colonial  trade  ?  Will  it  be  beneficial, 
if  other  nations  separate  themselves  into  isolated 
groups  by  tarifis,  to  have  a  vast  group  of  English 
countries  already  united,  and  does  this  question  difier 
in  any  way  from  the  general  problem  of  Free  Trade  ? 
Is  it  necessary  to  take  precautions  to  secure  a  supply 
of  food  in  case  of  war,  and  if  so,  would  federation  be 
a  stronger  safeguard  than  the  present  vast  extent 


124  ENGLAND'S  FOREIGN  TRADE  IN 

and  variety  of  the  sources  of  our  wheat?  Would 
federation  streng^then  us  politically;  and  finally,  do 
the  colonies  desire  it  ?     [See  Note  2,  p.  149.] 

Tbe  changes  in  the  proportions  are  so  slight  that 
slight  causes  might  have  produced  them;  but  they 
give  some  indication  of  the  broad  changes  of  the 
conditions  of  English  trade. 

The  great  proportion  to  British  possessions  in  1860 
reminds  us  that  the  gold  discoveries  were  followed  by 
rapid  colonial  development. 

The  increment  to  Europe  and  to  "  other  countries  " 
in  1870  marks  the  great  railway  boom. 

The  continuous  proportionate  decrease  to  the  States 
shows  the  cumulative  effects  of  their  tariff,  while  the 
slight  percentage  fall  in  the  case  of  Europe  is  due  to 
the  increase  of  their  tariffs  and  the  growth  of  home 
manufactures. 

This  brings  us  to  the  general  bearing  of  foreign 
competition,  and  the  first  step  towards  obtaining 
clear  ideas  on  the  subject  is  to  find  under  what 
circumstances  foreign  manufacture  can  have  any 
influence  on  our  trade. 

The  production  of  goods  to  be  imported  to  England 
will  be  sufficiently  considered  in  the  next  section. 
Let  us  now  take  in  detail  production  for  home  con- 
sumption (i.e.,  in  the  country  of  the  producer)  and 
production  for  export  to  neutral  markets.^ 

1.  The  first  point  to  be  noticed  in  the  development 
of  manufacture  of  goods  for  home  consumption,  in 
Germany,  for  instance,  is  that  each  factory  is,  gene- 
rally speaking,   started  with  new  accumulations   of 

1  That  is,  markets  equally  open  to  either  country  involved. 


THE  NINETEENTH  CENTURY.  125 

capital,  not  with  capital  withdrawn  from  old  estab- 
lishments. Thus,  many  investments  were  made  in 
manufactures  when  new  capital  was  flowing  into 
Germany  after  the  Franco-Prussian  War.  So  the  old 
capital  used  for  producing  goods  to  be  exported  to 
England  is  left  untouched  ;  an  outlet  for  these  goods 
is  still  needed,  payment  must  be  made  directly  or 
indirectly  in  goods  from  England,  and  though  some 
of  the  goods,  hitherto  imported  from  England,  are  now 
produced  at  home,  either  we  are  exporting  a  new  class 
of  goods,  or  there  is  an  increased  (German)  consump- 
tion of  the  same  goods,  and  the  English  and  German 
factories  are  complementary  to  each  other. 

The  fact  that  the  value  of  the  trade,  both  exports 
and  imports,  between  England  and  Germany  has 
increased  50  per  cent,  since  1886,  while  its  volume, 
owing  to  the  fall  of  prices,  has  increased  more 
rapidly,  shows  that  some  such  process  has  been 
going  on. 

The  United  States  supplies  a  good  example.  By 
home  manufacture  they  have  diminished  our  exports 
to  them  of  steel  and  tin  plates  ;  but  they  have  been 
sending  us  continually  increasing  quantities  of  wheat 
and  other  produce,  for  which  we  have  been  paying  by 
increasing  the  services  of  our  ships  in  their  trade,  and 
by  manufacturing  for  Eastern  countries,  who  have 
paid  goods  to  the  United  States  in  return  instead  of 
to  us.  It  is  by  such  methods  as  this  that  capital,  dis- 
placed by  increased  manufactures,  in  other  countries 
finds  new  occupation  ;  and  these  broad  changes  are 
naturally  not  realised  by  those  interested  in  the 
success  of  a  trade  threatened  by  foreign  competition, 


126  ENGLAND'S  FOREIGN  TRADE  IN 

The  cause  of  this  development  of  continental  trade 
may  be  stated  in  the  following  way  : 

Improved  agriculture  or  cheaper  supplies  of  food 
from  other  countries  has  set  free  a  larger  proportion 
of  the  population  for  manufacturing  and  other  indus- 
tries. Since  England  is  or  has  been  the  home  of 
all  manufactures,  some  of  the  surplus  labour  has 
necessarily  been  employed  in  manufactures  that  were 
formerly  the  monoply  of  England ;  becoming  richer, 
they  have  become  better  customers,  and  English 
work  driven  out  of  old  channels  has  continually 
found  new  ;  English  capital  and  enterprise  have  rarely 
failed  to  supply  this  new  demand,  and  the  continual 
warnings  of  depression  and  loss  have  generally  only 
come  from  those  who,  losing  their  old  trade,  had  not 
yet  found  a  new  outlet;  but  the  whole  volume  of 
exports  has  continually  increased.  Line  C,  Diagram 
vii.,  shows  the  increase  of  exports  other  than  the 
produce  of  our  great  staple  trades,  while  the  great 
length  of  the  list  of  exported  articles,  classified  in  1893 
in  the  Statistical  Abstract  under  some  120  heads,  with 
a  continually  growing  item  for  unenumerated  miscel- 
laneous goods,  points  to  continuous  increase  in  the 
variety  of  our  exports. 

If,  on  the  other  hand,  these  manufactures  are 
started  by  capital  hitherto  employed  in  other  direc- 
tions, there  is  necessarily  room  for  us  to  fill  up  the 
gap,  and  supply,  by  direct  or  indirect  trade,  the  goods 
formerly  produced  abroad. 

If,  however,  these  manufactures  are  artificially 
fostered  by  protection,  the  country,  thus  acting,  is  not 
richer  but  poorer  rather ;  they  can  no  longer  buy  our 


THE  NINETEENTH  CENTURY.  127 

exports,  and  we  must,  with  loss,  divert  our  capital  to 
some  less  profitable  employment.  There  is  no  doubt 
that  another  country  can  inflict  heavy  blows  on  us  in 
this  way,  that  the  United  States  have  done  so,  and 
that  we  have  no  remedy  ;  the  only  consolation  being 
that  the  greater  injury  to  themselves  is  so  apparent, 
that  after  a  time  they  may  realise  it  and  again  open 
their  ports,  as  there  is  some  prospect  of  the  States 
now  doing.     [See  Note  3,  p.  150.] 

The  diflSculties  and  loss  due  to  production  by  other 
countries  for  themselves  of  goods  formerly  imported 
from  us  are  thus  reduced  to  the  immediate  loss  due  to 
any  change,  and  to  the  difficulty  of  immediately  adapt- 
ing capital  and  labour  to  the  satisfaction  of  the  new 
demand,  which  under  normal  conditions  necessarily 
exists. 

2.  The  effect  of  foreign  countries  manufacturing 
for  exports  to  neutral  markets  is  inidatis  onutandis 
the  same.  If  the  world  is  richer,  if  new  capital  is  being 
used  for  production,  there  can  be  no  diminution,  only 
changes  in  distribution  of  trade.  But  in  this  case 
two  difficulties,  one  temporary,  the  other  permanent, 
become  prominent,  and  they  cannot  be  explained 
away. 

In  spite  of  increased  wealth  and  increased  demand, 
over-production  is  very  easy.  If  a  new  factory  is 
started  by  the  side  of  old  ones,  though  the  world  may 
be  rich  enough  to  buy  the  produce  of  both,  yet  its 
wants  in  that  direction  may  not  be  developed,  the 
channels  of  distribution  may  not  be  free,  and  the 
price  at  which  it  is  willing  to  take  the  new  supply 
may  be  too  small  to  be  remunerative  ;  or  a  mistake 


128  ENGLAND'S  FOREIGN  TRADE  IN 

may  have  been  made  altogether  as  to  the  class  of 
goods  which  the  new  wealth  demanded,  and  merely 
an  excess  of  articles  with  which  the  world  was  well 
provided  may  have  been  produced.  This  dead-lock  is 
in  each  individual  case  speedily  removed,  but,  of  course, 
each  mistake  will  exact  some  pecuniary  penalty. 

Again,  though  the  increasing  wealth,  evidenced  by 
increasing  manufactures,  will  create  a  new  or  an 
altered  demand,  which  England  has  the  chance  of 
satisfying,  this  new  demand  is  in  these  days  of  free 
commerce  and  competition  made  impartially  to  the 
whole  world,  the  country  where  trade  has  been  dis- 
placed having  only  the  advantage  of  unemployed 
labour  and  capital  set  free  from  its  old  trade.  That 
is  to  say,  that  each  change  is  a  step  towards  the 
division  of  labour,  a  new  prize  offered  to  the  most 
competent  to  supply  the  wants  of  mankind.  For 
this  prize  it  is  quite  possible  that  England  may 
not  be  a  successful  competitor.  Let  us  examine 
the  qualifications  for  success.  There  is  needed  an 
accurate  knowledge  of  the  goods  required,  a  rapid 
adaptation  of  fixed  and  floating  capital  and  labour  to 
their  production,  and  suitable  climatic  conditions ; 
then,  if  these  things  are  equal,  the  country,  where 
interest  and  profits  are  lowest,  and  labour  (measured 
by  its  efficiency)  cheapest,  wins. 

What  are  England's  chances  in  this  competition  ? 
Taking  the  factors  in  the  same  order,  investigation 
of  foreign  requirements  is  not  carried  to  the  same 
extent  as  other  nations  find  possible ;  ^  capital  is  very 

'  Why  should  not  our  consular  reports  be  equal  to  those  of 
the  States,  or  our  travellers  as  active  as  the  Germans  ? 


THE  NINETEENTH  CENTURY.  129 

easily  moved,  new  methods  are  soon  understood  and 
perfected,  and  the  English  artisan,  with  bis  skill  and 
common  sense,  very  soon  understands  new  machinery, 
while  England's  compactness  allows  rapid  migration 
to  the  best  seat  of  industry.  England's  climate  is 
eminently  suited  for  continuous  hard  work,  and  her 
supply  of  coal  has  hitherto  given  her  the  advantage 
over  every  other  nation.  Capital  is  so  plentiful  that 
interest  has  rapidly  fallen ;  while  profits  have  been 
cut  down  by  the  stress  of  competition,  since  no 
handicap  in  this  direction  could  be  afforded. 

There  remains  the  item  of  wages,  which  are  higher 
in  England  than  in  any  European  or  Asiatic  country. 
But  it  is  not  the  value  of  each  man's  wages,  but  the 
amount  of  work  done  for  a  given  quantity  of  wages, 
that  is  in  question. 

Many  business  men  hold  the  opinion  expressed  by 
an  American  manufacturer  thus  — "  If  a  difference 
in  rates  of  wages  establishes  itself  in  a  manufacture, 
between  two  places  allowed  to  trade  freely,  the  busi- 
ness is  more  likely  to  go  to  the  one  paying  higher 
wages,  than  to  leave  it  for  the  one  paying  lower," 
and  the  reason  for  this  is  a  double  one.  First,  from 
the  purely  economical  point  of  view,  if  a  man  succeeds 
in  obtaining  high  wages  it  is  because  his  increased 
work  and  skill  is  cheaper  at  that  price  than  inferior 
work  and  skill  at  a  lower  price.  Secondly,  the  effect 
of  high  wages  is  to  make  the  recipients  of  them  more 
civilised,  more  manly  and  trustworthy,  stronger  and 
better,  mentally,  morally,  and  physically.  The  mere 
statement  of  this  fact  goes  far  to  remove  the  idea 
that  the  competition  of  badly  paid  labour  will 
necessarily  be  injurious. 


I30  ENGLAND'S  FOREIGN  TRADE  IN 

To  support  this  view  many  figures  could  be  given, 
but  the  following  (referring  to  1893)  will  be  sufficient. 

Wages  in  Mexico  are  10  to  15  cents  a  day,  in 
New  England  about  a  dollar  a  day.  New  England 
competes  successfully  with  Mexico. 

Wages  in  factories  are  low  in  Switzerland,  fairly 
high  in  England,  higher  in  America  ;  but  the  number 
of  looms  run  by  one  man  in  the  three  countries  are 
two,  three  or  four,  and  six  or  eight  respectively. 

America  is  afraid  of  the  competition  of  "  English 
paupers"  just  in  the  same  way  as  we  are  of  con- 
tinental labour ;  yet  we  fear  American  competition. 

Wages  in  Bombay  are  far  lower  than  wages  in 
Manchester ;  but  Bombay,  with  all  its  efforts,  has 
only  obtained  part  of  one  particular  class  of  cotton 
spinning. 

Wages  vary  immensely  in  agricultural  districts 
all  over  the  world;  but  no  country  is  making 
exceptionally  large  profits  on  the  corn  it  exports. 

These  facts  are  sufficient  to  prove  that  badly-paid 
labour  is  not  necessarily  the  most  profitable;  but 
the  following  considerations  must  also  be  taken  into 
account : 

First,  if  wages  increase  faster  than  the  correspond- 
ing increase  in  efficiency  in  one  country,  and  at  the 
same  pace  in  another,  the  former  is  handicapped. 

Secondly,  if  the  supply  of  food  and  other  neces- 
saries is  cheaper  in  Brittany,  for  instance,  than  in 
England,  this  has  its  full  effect  in  keeping  wages 
lower  in  the  former.  Any  comparison  of  wages  with- 
out allowing  for  this  fact  is  perfectly  useless  ;  wages 
must  be  measured  by  the  amount  of  the  necessaries 


THE  NINE  TEE  NTH  CENTUR  V.  131 

and  luxuries  of  life  which  they  will  purchase  ;  that  is, 
those  necessaries  and  luxuries  which  are  customary  in 
the  country  of  the  workman,  whether  it  be  the  United 
States,  England,  Germany,  India,  or  China.  If  this 
consideration  is  neglected,  the  same  mistakes  will  be 
made  that  are  so  frequent  in  casual  comparisons  of 
wages  at  different  periods  in  England. 

Thirdly,  if  the  standard  of  living  is  higher  in 
England  than  in  France,  it  probably  means  that 
better  living  has  its  natural  effect  in  better  work, 
but  it  may  mean  that  the  French  spend  less  on 
useless  luxuries  than  the  English. 

English  labour  is  well  organised,  and  cannot  easily 
be  exploited  by  the  capitalist:  continental  labourers 
are  imperfectly  combined,  and  more  at  the  mercy  of 
their  employers.  Thus  the  Continent  has  at  present 
the  doubtful  advantage  of  cheap  labour  from  this 
source  also.  But  there  are  continual  efforts  being 
made  in  Belgium,  Germany,  and  France  on  the  part 
of  workmen  to  raise  their  status  and  their  wages 
towards  the  English  standard ;  and  these  efforts  will 
be  more  successful  as  these  countries  become  more 
wealthy.  In  the  long  run  real  wages  in  different 
countries  will  tend  to  equality  (i.e.,  equal  wages  for 
equal  quantities  of  work),  just  as  they  have  in 
different  towns  in  the  same  country. 

There  appear,  then,  to  be  no  valid  grounds  for  fear 
of  a  general  reduction  of  English  wages  towards  the 
continental  standard.  But,  when  the  stress  of  com- 
petition in  particular  trades  makes  itself  felt,  when 
profits  are  cut  down,  prices  diminished,  and  every 
economy  practised,  the  workmen  in  both  competing 


132  ENGLAND'S  FOREIGN  TRADE  IN 

countries  bear  their  part  of  the  strain.  If  the  other 
country  is  destined  to  win,  wages  and  profits  will 
diminish  to  the  lowest  possible  point  before  the  battle 
is  lost.  When  the  struggle  is  decided,  as  we  have 
already  shown,  there  will  be  new  openings  for  the 
workmen,  and  average  wages  in  the  whole  country  will 
be  as  before  ;  we  have  only  the  familiar  sequence  of 
changes  which  always  follow  a  change  of  industrial 
conditions,  whether  the  influences  at  work  are  confined 
to  one  country  or  involve  several. 

Before  we  can  admit  that  English  foreign  trade 
can  be  diminished,  we  must  admit  that  foreign 
nations  have  sufficient  capital  and  labour  to  spare 
(which  in  reality  would  take  a  generation  or  more  to 
accumulate)  to  undertake  our  industries,  that  England 
can  lose  her  compactness  and  her  highly  finished 
organisation  and  multifarious  division  of  labour,  that 
English  enterprise  and  courage  is  failing,  that  the 
energy,  common  sense  and  inherited  skill  of  the 
English  labourer  is  deserting  him,  that  we  have  no 
resources  but  coal,  can  succeed  in  no  manufacture  but 
cotton,  and  shall  lose  command  of  the  seas,  and,  more 
marvellous  still,  that  some  other  nation  will  obtain  and 
keep  these  advantages.  The  history  of  the  nineteenth 
century  teaches  no  such  lesson. 

But  if,  in  the  distant  future,  increased  skill,  or 
new  discoveries,  or  natural  advantages  give  to  some 
other  country  the  position  so  long  enjoyed  by  us,  if, 
as  the  great  process  of  world-wide  division  of  labour 
takes  its  inevitable  course,  it  is  found  that  in 
England  few  industries  can  find  a  place  that  are 
not  undertaken   better  elsewhere,  it  will  mean  that 


THE  NINETEENTH  CENTURY.  133 

Englishmen  will  gradually  forsake  the  home  country, 
that  English  enterprise  will  be  successful  in  some 
other  quarter  of  the  globe,  and  that  England  will 
still  be  the  home  and  mother  of  successful  and 
multitudinous  offspring. 

3.   IMPORTS  AND   AGRICULTURE. 

Our  foreign  trade  is  to  a  great  extent  an  elaborate 
machinery  for  supplying  us  with  food.  Of  the 
£470  millions'  -  worth  of  goods  which  come  to  our 
share,  at  least  £200  millions'-worth  is  food ;  while 
£115  millions'-worth  is  of  raw  materials,  which 
can  be  definitely  reckoned,  and  of  the  remaining 
£155  millions,  if  it  was  possible  to  distinguish 
materials  for  manufacture  from  materials  for  sale, 
part  would  be  found  to  be  materials  for  our  factories, 
rather  than  goods  for  consumption. 

Let  us  consider  how  this  enormous  annual  bill  for 
food  is  paid,  regarding  the  whole  nation  as  a  single 
family.     Tabulating  imports  and  exports  thus  : — 

IMPORTS   FOR   CONSUMPTION   OR  MANUFACTURE,   ROUGHLY 
GROUPED. 


Food  

Wine  and  Tobacco, 

Raw  Textiles, 

Other  Raw  Materials  and  Articles, 

unmanufactured. 
Articles  mainly  Manufactured, 


mainly 


Annual  Average. 
1898-1902. 

£190  million. 
10 
55 

75 
110 


£440 
Interest  on  Capital  (approximate  estimate)  85 


£355  million, 
to  be  paid  by  exports,  and  earnings  of  shipping. 


134  ENGLAND'S  FOREIGN  TRADE  IN 


EXPORTS  OF  HOME  PRODUCE. 


Textile  Products,   ... 

Iron  and  Steel  and  their  Products, 

Coal,  

Other  Merchandise  


Earnings     of     Shipping     (approximate 
estimate),        


Annual  Average. 
1898-1902. 

£100  million. 
50       „ 
30       „ 
90       „ 

£270       „ 

85       „ 

£355  million. 

In  the  manufacture  of  textiles,  so  great  is  the  in- 
crease of  value,  that  after  the  home  market  has  been 
supplied,  the  exports  of  yarn  and  cloth  are  worth 
£45,000,000  more  than  the  raw  materials.  The 
cotton  workers  thus  pay  for  the  raw  cotton  we  use  at 
home,  and  have  this  surplus  towards  our  food  supply. 

Workers  in  mines,  iron  foundries,  steel,  machinery, 
etc.,  add  to  the  value  of  the  ores  extracted  and  the 
ores  and  metals  imported  to  such  an  extent  that  we 
are  supplied,  and  a  surplus  of  £50,000,000  is  ready  to 
pay  for  imports. 

These  sums  added  to  the  earnings  of  our  ships  go 
far  to  make  up  the  £190,000,000  sufficient  to  cover 
our  bill  for  provisions. 

This  done,  we  may  reckon  that  half  the  miscellane- 
ous goods  imported  are  in  return  for  miscellaneous 
exports,  while  the  other  half  are  the  interest  due  on 
our  foreign  investments. 

We  do  not  mean  to  imply  that  the  destination  of 
our  textiles  is  the  country  which  supplies  our  corn, 
with  similar  conditions  for  the  other  case ;  but  only 
to  supply  data  for  comparing  the  relative  importance 


DIAGRAM  X  ^0 

shewing  Sources  of  Imports^ 

puinquenn/a/  aver  ages  ^/ven  for  periods 


(854-57,  58-62, 65-6/,  66-72,  7377,  78-82,83-87,  88-921  \  95-^7,98-02.        ^ 


:  ^ 

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J»70  1680  1890  1900 

[.S-^f-  Xofe  Kt.  ^7^.'//^  182.] 


THE  NINETEENTH  CENTURY. 


135 


of  different  trades.  As  a  matter  of  fact,  our  exports 
do  not  always  go  to  the  countries  from  which  we 
obtain  imports.  The  United  States  are  paid  for  their 
corn  partly  by  manufactures,  partly  by  goods  from 
China  and  other  countries,  who  thus  pay  their  debts 
to  us.  Again,  food  imports  are  often  the  payment 
of  interest  on  capital  invested ;  and  in  many  cases  it 
is  not  easy  to  trace  the  equilibrium  of  trade.  The 
broad  result  is  a  balancing  of  all  the  individual 
transactions,  accomplished  by  bills  of  exchange  on 
individual  dealers,  and  involving  an  infinitude  of 
operations. 

The  quantity  of  imports  which  we  obtain  for  home 
consumption  is  the  measure  of  the  benefit  of  our 
trade.  Imports  may  be  divided  into  two  classes 
(between  which,  however,  there  is  no  distinct  line  of 
demarcation),  those  which  we  could  obtain  by  home 
growth  or  manufacture,  and  those  which  we  could 
not. 

Selecting  the  largest  items  from  a  list  of  imports 
for  consumption  or  manufacture  (so  as  to  tabulate 
about  three-quarters  of  the  whole),  we  find  : — 


Wool,         

Other  Raw  Textiles, 

Grain  and  Meal, 

Fish,  Meat,  Animals, 
Tea,  Coflfee,  Sugar,  Wine,  Spiriti 
Produce,     ... 

Dairy  Produce,      

Ores  and  Un wrought  Metals, 

Timber, 

Textile  Manufactures,     . . . 


and 


Tropical 


Annual  Average. 

1898-1902. 

£15 

million. 

55 

50 

50 

60 

35 

20 

25 

30 

£340;!million. 

K 

136  ENGLAND'S  FOREIGN  TRADE  IN 

Now  select  those  goods  which  we  could  not  obtain 
at  home,  viz. : — 

Cotton,  Silk,  Jute,  etc., £54  million. 

Tropical  Produce,  etc., 62        „ 

Ores  and  Unwrought  Metals,    ...         ...         ...  20       „ 

or  less,  for  our  mines  could  be  more  fully  worked  ;  or 
about  three-eighths  of  the  goods  enumerated. 

With  regard  to  these,  no  one  can  have  any  doubt  as 
to  the  benefits  of  trade. 

We  can  grow  timber  and  corn,  supply  butter,  eggs, 
cheese,  and  meat,  and  manufacture  silk ;  but  the 
proof  of  the  benefit  of  importing  them  is  three-fold. 
In  the  first  place,  no  one  will  buy  foreign  goods  if  he 
can  obtain  those  more  to  his  taste  or  at  a  lower  price 
of  home  growth  ;  hence  the  fact  that  they  are  bought 
proves  the  existence  of  advantage.  Secondly,  no 
foreigner  will  send  us  goods  unless  he  can  obtain 
from  England  or  England's  debtors  produce  which  he 
prefers  to  that  of  his  own  growth ;  in  which  case  it 
follows  that  our  labourers  are  engaged  in  some 
occupation  more  advantageous  both  to  us  and  our 
customers  than  those  in  question.  Thirdly,  there  are 
all  the  reasons  summed  up  in  the  phrase  ''  diminishing 
return,"  which  may  be  thus  explained.  It  may  very 
well  be  possible  that  by  improved  methods  and  con- 
ditions, and  enterprise  well  directed,  some  part  of  the 
demand  for  dairy  produce,  say,  could  be  secured  for 
English  farmers  ;  but  the  magnitude  of  the  figures 
shows  that  though  more  pasture  land  might  reduce 
the  importation  of  meat,  or  more  arable  ground  the 
importation  of  corn,  it  would  be  impossible  to  produce 


THE  NINETEENTH  CENTURY.  137 

grain,  meat,  wool,  dairy  produce,  and  wood  from  the 
soil  suflScient  for  home  needs.  Moreover,  after  the 
first  possible  trifling  alterations  had  been  made,  after 
more  attention  had  been  given,  for  instance,  to  fruit 
or  to  cheese,  and  the  larger  problem  of  growing  corn 
was  attacked,  it  is  obvious  that  the  soil  that  does 
not  now  pay  when  sown  must  be  used ;  that  each 
increase  in  this  direction  would  mean  the  utilisation 
of  more  and  more  inferior  soil,  or  the  placing  on  better 
soil  a  burden  greater  than  it  could  bear  without 
injury,  or  without  more  careful  and  laborious  atten- 
tion ;  that,  in  fact,  as  more  grain  was  demanded, 
increasing  labour  for  each  new  increment  would  be 
necessary,  and  the  price  would  rise  with  each  increase 
of  supply.  This  is  what  is  meant  by  the  law  of 
diminishing  return. 

We  thus  see  that,  from  the  point  of  view  of  economy 
in  purchasing  food,  as  a  nation  we  have  reason  to  be 
glad  that  corn-growing  country  is  becoming  pasture 
land,  or  going  out  of  cultivation ;  it  means  that  the 
price  of  grain  is  falling,  and  that  we  can  obtain 
supplies  more  cheaply  from  other  countries.  It  also 
means  that  there  is  an  increase  of  employment  in 
other  occupations,  for  no  one  will  send  us  corn 
without  payment,  which  can  only  be  made  by 
exportation  of  goods.  Money  does  not  "go  out  of 
the  country,"  nor  go  "  to  the  foreigner  instead  of  to 
the  English,"  it  merely  goes  to  the  artisan  or  the 
factory  hand  instead  of  to  the  agricultural  labourer. 
The  result  is  pure  gain  pecuniarily  to  the  country  as 
a  whole ;  work  is  applied  in  directions  which  give 
the  greatest  return.     It  remains  to  consider  the  effect 


138  ENGLAND'S  FOREIGN  TRADE  IN 

on  farmers,  and  the  social  effect  on  the  country  of 
this  migration  of  labour,  and  then  to  discuss  the 
future  possibilities  of  change  in  this  direction. 

The  complete  discussion  of  the  agricultural  question 
would  need  a  book  to  itself  ;  all  that  is  possible  here 
is  to  sum  up  the  historical  aspect  of  it. 

The  days  of  the  Corn  Laws  were  a  golden  time  for 
landlords,  as  was  the  war  for  farmers.     All  the  corn 
that  could  be  grown  obtained  a  ready  sale,  and  in  a 
time   of   scarcity   fortunes    could   be   made    at    the 
expense  of  the  suffering  nation.     The  usual  penalties 
for   trade   artificially  aided  were  exacted   from    the 
next  generation  of  landlords.     Rents  had  been  fixed 
on  the  basis  of  the  old  system,  and  were  not  modified 
sufiiciently  till  incalculable  mischief  had  been  done ; 
landlords  would  not,  and  till  this  day  do  not  fully, 
recognise  that  English  soil  cannot  bear  the  burden  of 
heavy  rents  in  competition  with  cheap  land  abroad. 
Farmers   had   drifted   into   the   extravagant    habits 
usually  begotten  by  prosperity,  and  were  neglecting 
the  knowledge  of  their  trade.     Notwithstanding  the 
great  progress  of  the  science  of  agriculture  at  the  end 
of  the  eighteenth  century,  the  land  was  injudiciously 
used,  and  exhausted  to  obtain  great   crops  for  the 
current  high  prices. 

In  spite  of  these  handicaps,  agriculture  continued  a 
prosperous  undertaking,  compared  with  other  invest- 
ments, for  many  years  after  the  repeal ;  and  the 
cries  of  distress  were  due  to  the  fall  of  prices,  not  to 
a  low  level,  but  from  the  artificial  height  to  which 
tariffs  had  raised  them. 

From    about    1870     onwards,    however,    English 


THE  mNETEENTH  CENTURY, 


agriculture  was  seriously  attacked.  The  competition  of 
new  countries,  where  land  could  be  had  almost  for 
the  asking,  where  in  some  cases,  such  as  Russia  and 
India,  labour  was  cheap  ;  in  others  where  the  soil 
yielded  a  crop  after  but  little  work ;  in  others  where 
pioneers  in  the  West  did  not  mind  whether  they 
made  a  profit  or  not,  provided  they  established  a 
claim  to  the  land,  which  they  could  sell  when  advanc- 
ing population  raised  its  value — this  competition 
found  England  unprepared.  Some  of  her  soil  is  the 
finest  for  wheat-growing  in  the  world,  in  the  sense 
that  sufficient  labour  will  produce  the  most  luxuriant 
harvest  from  a  given  area ;  but  then  there  was  also 
inferior  land  under  cultivation.  Then,  in  all  cases, 
landlords  expected  rent  greater  than  could  be  afforded 
under  the  new  conditions,  and  English  labour,  even 
agricultural,  is  not  cheap,  compared  with  continental 
or  Eastern  countries.  Thus  a  steady  fall  of  prices  has 
set  in,  agriculture  in  the  most  favourable  districts 
does  not  pay  as  it  used,  in  the  worse  districts  does 
not  pay  at  all,  and  there  are  no  extra  profits  to  be 
made  in  seasons  of  scarcity  at  home,  for  all  the  world 
is  ready  to  fill  up  our  deficits. 

During  this  time  there  has  naturally  been  a 
relative  diminution  of  agricultural  labourers,  since  a 
larger  proportion  of  our  workmen  is  required  to  pay 
for  imported  food,  and  in  some  districts  an  actual 
diminution,  owing  partly  to  the  changing  of  arable 
into  pasture  land  (which  is  still  profitable),  and  partly 
to  the  higher  wages  or  superior  attractions  of  town. 
But,  as  a  matter  of  fact,  agricultural  wages  have  not 
fallen;  they  have  during  the  century  steadily  risen 


140  ENGLAND'S  FOREIGN  TRADE  IN 

as  a  whole  ;  they  have  only  increased  less  rapidly 
than  wages  of  artisans.  The  loss  has  fallen  almost 
exclusively  on  landlords  and  farmers.  It  is  always  a 
melancholy  spectacle  to  see  the  suffering  or  ruin  of  a 
class  which  necessarily  accompanies  any  change  and 
improvement  in  trade  ;  it  is  the  heavy  price  which  must 
invariably  be  paid  for  progress;  the  hand- worker 
loses  when  machinery  is  introduced,  the  small  manu- 
facturer is  ruined  when  the  large  factory  is  established, 
old  occupations  must  give  way  to  new  and  profitable 
trades,  and  in  the  next  generation  the  distress  passes, 
and  the  old  customs  are  forgotten. 

Nevertheless,  it  is  not  certain  yet  that  English 
agriculture  cannot  improve  ;  rents  may  be  further 
reduced,  land  may  be  used  for  its  most  profitable 
products,  fruit,  or  dairy  produce,  or  meat  (of  constantly 
increasing  importance  as  the  urban  population  grows 
in  size  and  wealth), inequalities  of  transport  and  freight 
may  be  removed,  and  large  country  districts  be  in  the 
most  flourishing  condition.  There  is  a  limit  to  the 
virgin  land  which  can  be  taken  up.  When  and  before 
that  is  reached,  land  now  cultivated  must  be  made  by 
extra  labour  to  produce  greater  harvests,  more  work 
will  be  needed  for  the  growth  of  wheat,  prices 
must  rise.  With  increasing  population  the  States 
will  have  less  to  export  to  us.  The  law  of  "  diminish- 
ing return"  must  some  day  apply  to  the  whole 
world ;  and  it  seems  probable  that  the  day  must 
come  when  we  shall  see  the  series  of  agricultural 
changes  of  this  generation  reversed  in  England  ;  land, 
let  out  of  cultivation,  again  utilised,  prices  rising, 
and  agriculture  prosperous. 


THE  NINETEENTH  CENTURY.  141 


One  important  effect  of  this,  the  most  characteristic 
and  important  phenomenon  due  to  our  foreign  trade, 
remains  to  be  mentioned.     In  England  especially,  in 
all  countries  which  have  taken  to  manufacturing  to  a 
less  extent,  in  the  States,  in  Germany  and  in  France, 
the  country  population  tends  to   be   a   diminishing 
proportion  of  the  whole,  while  the  towns  increase. 
In  the  broadest  sense  this  means  that,  owing  to  the 
introduction  of  machinery  in  farming,  and  the  appli- 
cation of  science,  less  labour  is  needed   to   produce 
each  man's  food,  and  the  world  can  spare  more  and 
more  energy  for  other  productions.     Meanwhile,  we 
are  exchanojino^  the  health  and  the  subtle  influences 
of   country   life   for    the    bustle,   strain,   unsanitary 
conditions  and  crowding  of   towns  ;    and  unless  the 
Utopian  scheme  (less  favoured  by  modern  economists 
than  by  the  philosophers  of  the  sixteenth  century)  of 
alternate  changes  from  town   to   country  labour   of 
each  family  is  adopted,  unless  "many  of  them  take 
such  pleasure  in  agriculture  that  they  desire  leave  to 
continue  in  it  many  years,"  ^  grave  effects  are  to  be 
feared  on  the  physique  and  health  of  the  English 
race. 

4.   CONCLUSION. 

The  growth  of  our  foreign  trade  has  had  so  many 
intricate  and  far-reaching  effects  in  every  phase  of 
our  political,  social,  and  individual  life,  and  in  every 

^  More's  "  Utopia."  (The  modern  interpretation  would  be 
that  the  children  of  citizens  should  migrate  to  the  country, 
the  children  of  country-folk  to  the  town.) 


i42  ENGLAND'S  FOREIGN  TRADE  IN 

department  of  business,  that  it  is  not  easy  to  sum 
them  up. 

The  first  effect  on  individual  incomes  is  sufficiently 
obvious ;  money  will  often  go  further  when  laid  out 
in  foreign  goods  than  in  native.  It  is  not  easy  to 
make  the  comparison,  because  the  corresponding  home 
goods  disappear  from  the  market ;  but  each  article  of 
foreign  growth  or  manufacture,  e.g.,  corn,  meat,  alarum 
clocks,  when  first  oflfered  for  sale  was  at  a  lower  price 
than  the  English  produce,  and  we  have  gained  in  all 
these  goods  the  whole  difference  between  the  English 
and  foreign  prices.  We  have  no  means  of  estimating 
this  gain,  but  the  goods  thus  cheapened  have  been 
sufficiently  numerous  to  account  for  nearly  one- 
quarter  ^  of  our  private  expenditure.  Of  course,  we 
have  the  further  advantage  of  greatly  increased 
variety.  We  may  at  the  same  price  buy  cheese  from 
Canada,  Holland,  or  Cheddar  ;  we  can  have  the  fruit 
and  wine  of  every  country,  and  metals  from  any 
mine  in  the  world.  So  great  is  the  variety  of  goods 
imported,  and  from  so  many  sources  do  they  come, 
that  very  few  people  could  say  definitely,  in  looking 
round  an  ordinary  room,  which  things  in  it  had  no 
foreign  workmanship  in  them. 

The  benefit  of  this  increase  of  purchasing  power 
has  not  been  equally  distributed  ;  it  has  come  mainly 
to  the  working  classes  and  to  people  with  small 
incomes.  Our  imports  consisting  so  largely  of  food, 
it  is  those  who  have  to  consider  every  penny 
expended  in  housekeeping  who  are  enriched  by  the 
reductions  in  price  of  bread,  meat,  and  rice.  Since 
^  The  exact  fraction  is  not  known,  even  approximately. 


THE  NINETEENTH  CENTURY.  H% 

the  era  of  foreign  trade  there  are  hardly  any  in 
regular  employment  so  poor  that  they  cannot  obtain 
as  much  bread  as  they  want  of  a  liner  quality  than 
middle-class  people  at  the  begining  of  the  century  ; 
meat  is  no  longer  a  rare  luxury  among  any  large 
class  of  workmen  as  it  was  fifty  years  ago  ;  it  is  only 
necessary  to  allude  to  the  reductions  in  price  of 
tea,  sugar,  jam,  foreign  cheese,  clothing  materials,  and 
other  commodities  which  bulk  largely  in  a  working- 
class  budget.  At  the  same  time  a  variety  of 
food  is  possible,  which  must  conduce  greatly  to  the 
health  and  pleasure  of  city  life. 

The  wealthy  have,  of  course,  gained  the  same 
advantages  as  the  poor,  but  since  bread,  meat,  fruit, 
and  wine  are  at  their  command  at  whatever  price  they 
may  be,  the  boon  has  been  comparatively  slight  to 
them. 

As  we  saw  at  the  commencement,  foreign  trade 
was  first  the  result  of  inventions  and  then  the  cause 
of  further  inventions.  We  must  credit  to  foreign 
trade  a  large  part  of  the  cheapness  and  variety  of 
goods  of  home  manufacture.  Consider,  for  instance, 
the  efi^ect  of  modern  inventions  in  the  cotton 
manufacture.  An  improvement  is  made  in  spinning  : 
almost  instantaneously  America  and  India  learn  the 
new  method,  and  by  competition  of  foreign  manu- 
factures English  customers  and  the  whole  world  at 
once  get  the  full  benefit  of  the  new  economy :  it  is 
rarely  that  they  now  have  to  wait  till  a  patent  expires. 
Foreign  competition  first  stimulates  the  inventive 
faculties  of  the  manufacturer,  and  then  gives  us  at 
once  the  full  advantage  of  inventions,  the  inventor 


144  ENGLAND'S  FOREIGN  TRADE  IN 

still  obtaining  some  reward  by  being  first  in  the  field. 
In  short,  the  benefits  of  the  Industrial  Revolution  to 
home  trade  could  not  have  been  secured  without  the 
indirect  influence  of  foreign  trade. 

The  effects  of  the  growth  of  foreign  trade  on  the 
relations  between  nation  and  nation  have  been  as 
great  politically  as  they  have  been  commercially. 
The  final  influence  which  trade  will  have  on  war  is 
not  yet  determined.  Nations  are  now  inter-dependent; 
the  sudden  isolation  of  any  one  by  war  or  by 
tarifls  would  revolutionise  the  trade  of  many  others. 
A  war  that  hindered  our  merchant  service  would 
quickly  produce  such  distress  as  would  necessitate 
a  rapid  conclusion  of  peace,  and  though  other 
countries  would  sufier  in  the  same  manner,  their 
foreign  trade  is  not  so  developed  that  its  cessation 
would  have  equally  disastrous  effects.  This  view 
exaggerates  the  insecurity  of  our  position  ;  for,  though 
our  dependence  on  importation  for  our  supply  of 
food  would  make  our  suflering  markedly  acute,  yet 
the  advantage  of  our  trade  is  as  great  to  our  cus- 
tomers as  to  ourselves,  and  its  hindrance  would  after 
a  short  time  be  ruinous  to  them.  The  advocates  of 
peace  have  gained  a  very  strong  argument  from  this 
addition  to  the  horrors  and  dangers  of  war. 

England's  start  in  the  development  of  trade  has 
given  her  a  unique  position  in  the  commercial  world : 
the  dignity  of  her  position  has  risen  during  the 
century :  fifty  years  ago  she  was  the  storekeeper  for 
Europe  of  the  goods  of  the  East  and  the  Tropics  ;  she 
has  ceased  to  hold  that  office,  owing  to  the  develop- 
ment of  transport  and  means  of  communication,  but 


THE  NINETEENTH  CENTURY.  145 

her  capital  and  credit  have  made  her  the  banker  of 
the  world. 

So  far  we  have  glanced  at  the  pleasant  aspects  of 
foreign  trade,  so  familiar  as  to  need  only  a  brief 
recapitulation,  and  we  have  seen  such  increase  of 
wealth  and  efficiency  of  labour  as  will  outweigh  any 
evils  we  may  find  on  the  reverse  of  the  picture; 
nevertheless,  there  are  evils  to  be  faced,  though  good 
is  interspersed  even  amongst  them. 

The  effects  of  the  world-extension  of  trade  on 
general  business  have  been  an  acceleration  of  pace, 
an  accompanying  increase  of  risk  (with  counter- 
balancing effects  such  as  the  improvement  of 
communication,  which  tend  to  security),  a  great 
development  of  competition  with  its  evils  as  well 
as  its  benefits,  and  an  endless  complication  of 
interests,  methods,  and  chances. 

The  regular  occurrence  of  commercial  depressions 
is  a  phenomenon  known  before  the  era  of  foreign 
trade,  but  these  depressions  are  now  more  far-reach- 
ing, of  longer  duration,  and  of  more  involved  and 
doubtful  origin  than  formerly.  The  result  is  a  sinking 
of  profits,  with  long-delayed  reaction,  and  great  diffi- 
culty in  foreseeing  and  calculating  effects.  A  new 
uncertainty  is  introduced  into  trade,  the  vast  compli- 
cation is  almost  beyond  the  ken  of  the  keenest  men 
of  business.  And,  while  the  whole  system  of  trade 
is  continually  changing,  the  more  important  of  all 
the  adjustments  of  business  is  left  to  chance,  which 
theoretically  arranges  all  these  matters  on  the  best  of 
all  possible  systems,  but  actually  leaves  much  to  be 
desired.     While  competition  for  leave  to  manufacture 


146  ENGLAND'S  FOREIGN  TRADE  IN 

and  sell  is  so  great,  that  with  the  suffering  of  the 
manufacturer  the  public  is  served  with  the  cheapest 
and  best  goods,  the  competition  for  leave  to  work  and 
obtain  wages  is  so  keen  that  that  public  can  hardly 
find  vent  for  its  energies  and  obtain  the  means  to 
buy.  The  increase  of  each  man's  power  of  production 
appears  to  have  been  greater  than  the  increase  of 
production  itself.  The  great  machine  has  been  im- 
proved so  fast  that  fewer  men  are  needed  to  work  it ; 
and  since  only  those  who  receive  wages  for  work  or 
interest  from  profits  can  purchase  its  products,  we. 
have  particular  machines  tending  to  produce  more 
than  customers  are  ready  to  buy.  Oar  system  of 
trade  has  developed  so  fast  that  we  are  no  longer  able 
to  manage  it.  Men  become  better  and  better  qualified 
for  every  branch  of  work  (except,  indeed,  for  the 
quiet,  peaceful,  and  old-fashioned  industries),  but  for 
each  vacant  post,  whether  for  intellectual,  clerical,  or 
mechanical  work,  the  number  of  competitors  is  out  of 
all  proportion  to  that  required. 

Even  if  we  wished  to  pause  we  could  not.  There 
is  no  possibility  of  a  world-wide  arrangement  of  pro- 
duction or  of  division  of  labour  other  than  natural 
causes  or  chance  dictate.  We  cannot  make  any  really 
great  deviation  from  the  established  rule  of  free 
industry  and  competition  without  damaging  our 
foreign  trade.  We  must  continue  in  the  race,  and 
we  may  comfort  ourselves  with  this  reflection  —  in 
all  our  investigations  we  have  found  no  essential 
point  in  which  foreign  trade  diff"ers  from  home  trade 
except  in  its  greater  complication.  Home  trade  has 
long  been  subject  to  the  strain  of  competition,  and 


THE  NINETEENTH  CENTURY,  147 

we  have  been  steadily  growing  richer,  keeping  the 
advantages  we  have  gained  and  finding  employment 
and  wages  for  the  great  mass  of  the  people:  the 
competition  from  foreign  trade  has  had  less  time 
for  adjustment,  its  great  benefits  already  far  exceed 
the  loss  and  worry  due  to  change  and  unsettling  ;  and 
we  may  hope  that  we  shall  become  accustomed  to  the 
pace  and  masters  of  the  method  of  modern  business, 
as  earlier  in  the  century  we  became  used  to  factories 
and  masters  of  the  organisation  of  machinery. 

We  are  still  at  the  commencement  of  the  growth 
of  international  trade.  Only  a  fraction,  perhaps  one- 
fifth,  of  British  capital  and  labour  is  invested  in 
the  carrying  on  of  foreign  trade ;  with  improvements 
of  communication  and  knowledge,  and  decrease  of 
prejudice,  there  is  no  reason  why  division  of  labour 
among  nations  should  not  be  brought  to  as  great 
perfection  as  division  among  different  districts  of 
England,  why  each  country  should  produce  for  itself 
more  than  a  fraction  of  the  moveable  goods  it 
requires. 

The  history  of  this  century  may  be  repeated ; 
nations  learn  to  be  at  peace  with  one  another,  if  the 
burden  of  vast  armies  and  the  sense  of  the  silent 
majority  induce  disarmament ;  the  advantages  of  Free 
Trade  may  be  rediscovered ;  as  steam  and  mechanical 
inventions  in  this  century,  so  electricity  and  physics 
in  the  next  may  further  increase  man's  power  over 
nature  ;  and  perhaps  we  shall  see  the  beginning  of 
an  expansion  of  foreign  trade,  which  will  surpass 
even  the  unprecedented  growth  of  this  century. 


APPENDIX  TO  REVISED  EDITION,  1905. 


Note   i.— Free    Trade. 

See  pp.  41-46.— It  seemed  best  to  leave  the  treatment  of  the 
principles  of  Free  Trade  exactly  as  published  in  the  First  Edition. 
Recent  controversy  has  brought  into  prominence  considerations 
which  call  for  additional  comment. 

As  regards  Section  5,  p.  42. — It  is  supposed  by  many  that 
an  increase  of  imports  diminishes  home  employment.  Now, 
imports  must  either  come  (a)  in  payment  of  debt,  or  (/3)  as  loans 
to  be  repaid  in  the  future,  or  (7)  be  paid  for  almost  at  once  by 
exports  or  other  services  ;  in  other  words,  they  must  correspond 
to  past,  present,  or  future  exports  or  other  services.  A  study  of 
our  trade  statistics  shows  that  more  gold  comes  into  the  United 
Kingdom  than  leaves  it,  and  the  quantity  is  insignificant  com- 
pared with  the  whole  value  of  our  trade,  so  that  the  great  part 
of  the  balance  is  to  be  made  by  exports  of  goods  and  other 
services.  These  other  services  are  mainly  the  work  done  by 
our  merchant  navy,  and  by  the  financiers  and  agents  in 
London,  who  are  intermediaries  in  many  wholly-foreign  trade 
transactions. 

As  regards  (a)  and  (/3),  the  evidence  goes  to  show  that  we 
have  almost  continuously  increased  our  net  investments  abroad 
(except  perhaps  in  the  time  of  the  South  African  war),  and 
that  there  has  been  a  regularly  increasing  flow  of  interest  to 
us.  As  regards  (7),  the  services  of  our  ships  appear  to  have 
increased  steadily.  Apart  from  these,  we  are  left  with  a  steady 
volume  of  imports  which  must  in  the  main  be  paid  for  by  a 
steady  volume  of  exports,  and  any  change  in  one  must  produce 
a  change  in  the  other.  Imports  are  not  then  necessarily  con- 
nected with  any  diminution  in  the  amount  of  home  employment. 
On  the  other  hand,  the  kind  of  employment  needed,  and  the  date 


APPENDIX.  149 


at  which  services  are  to  be  rendered,  is  affected  by  every  change 
in  any  of  the  factors  that  go  to  make  the  balance  ;  but  this 
continual  change  does  not  differ  from  the  changes  induced  by 
variations  of  credit  and  of  demand  in  internal  trade.  Whether 
the  enlargement  of  the  field  of  transactions  tends  to  steady 
employment,  or  the  reverse,  is  a  matter  of  dispute. 

As  regards  Section  6,  p.  42. — Many  economists  hold  that 
the  German  industrial  policy  has  benefited  German  trade,  home 
and  foreign.  This,  from  the  nature  of  the  case,  can  neither  be 
proved  nor  disproved.  It  may  happen  that  unlimited  com- 
petition may  give  immediate  benefit  to  the  individual,  at  the 
future  expense  of  the  nation,  as  trade  may  be  directed  on  lines 
which  lead  to  rapid  advantage,  but  diminish  the  chance  of  more 
permanent  returns  ;  it  is  conceivable  that  a  wise  government 
could  hinder  this  tendency,  but  the  practical  difliculties  of 
deciding  what  transactions  come  under  this  head,  and  of 
checkmg  them  without  unforeseen  and  injurious  complications, 
seem  to  the  present  writer  insuperable. 

The  main  justification  for  a  so-called  "  National  Policy  "  is  to 
be  found  in  the  last  paragraph  of  page  15,  and  the  paragraph 
beginning  "  It  is  often  thought .  .  . "  on  page  43.  These  are  left 
as  in  the  First  Edition,  except  that  the  words  ' '  or  the  country  " 
are  added,  p.  16, 1.  5. 

'Note  2. — Colonial  Pkeference. 

See  pp.  121, 124. — The  paragraphs  relating  to  Imperial  federa- 
tion are  left  exactly  as  in  the  First  Edition.  The  question  has 
developed  a  good  deal  since  then.  In  1898  Canada,  and  in  1903 
Cape  Colony,  gave  a  preference  to  the  home  country  (that  is, 
allowed  dutiable  goods  to  enter  at  rates  below  the  ordinary  tariff). 
The  proposal  has  been  made  that  the  various  members  of  the 
British  Empire  shall  make  general  and  special  agreements  to 
give  preference  to  each  other's  goods.  This  involves  the 
necessity  that  those  members  (including  the  United  Kingdom) 
whose  trade  is  now  on  a  Free  Trade  basis  shall  re-arrange  their 
tariff  so  as  to  make  reductions  from  it  possible  ;  e.fir,,  that  we 
should  put  a  tax  on  foreign  wheat  in  order  to  make  a  reduction 
in  favour  of  Colonial  wheat.  This  would,  of  course,  involve 
protection  to  those  home  products  which  were  of  the  same  kind 


ISO  APPENDIX. 


as  imported  Colonial  products.  At  the  same  time,  a  tariff  of 
this  nature  would  make  it  easy  to  retaliate  on  foreign  countries 
who  treated  our  goods  adversely.  Colonial  preference  has  thus 
become  involved  with  protection  of  home  industries,  and  with 
a  bellicose  attitude  in  trade  matters  towards  foreign  countries. 
The  alternative  scheme  of  giving  bounties  on  imported  Colonial 
goods,  which  would  give  a  preference  to  the  Colonies  without 
protection  at  home,  has  not  received  support.  Modern 
arguments  for  protection  in  the  United  Kingdom  do  not  differ 
in  the  main  from  those  outlined  on  pages  43,  44,  and  developed 
in  Note  1,  above. 

NoU  5.— Changes  in  Foreign  Tariffs. 

See  pp.  62, 67, 68,  69,  70, 71, 127.— In  U.S.A.  the  "McKinley" 

Tariff  of  1890  was  replaced  by  the  "Wilson  "  Tariff  in  1894,  by 
which  duties  were  reduced  ;  but  in  1897  another  change  was 
made,  and  the  "Dingley"  Tariff  brought  duties  up  to  a  very 
high  level.  The  exports  of  British  and  Irish  produce  to  U.S.A. 
were  valued  at — 


1890 

1891 

1892 

1893 

1894 

1895 

1896 

Million  £32 

28 

26 

24 

19 

28 

20 

1897 

1898 

1899 

1900 

1901 

1902 

1903 

Million  £21 

15 

18 

20 

18 

24 

22 

In  Prussia  duties  were  reduced  in  1862,  in  the  Zollverein  in 
1865.  The  German  Empire  was  constituted  in  1871.  In  1879 
the  German  Tariff  was  raised  to  a  strongly  protective  level,  and 
it  was  increased  further  in  1885.  There  was  some  reduction  in 
1891,  but  the  tariff  remained  at  a  high  level,  which  was  raised 
especially  on  agricultural  products  by  a  general  revision  in  1902, 
coming  into  force  in  1905  or  1906. 

In  France  the  "Cobden"  Treaty  of  1860  governed  the  tariff 
till  1882,  when  some  duties  were  increased  and  others  reduced. 
A  considerable  increase  followed  iii  1892. 

The  Board  of  Trade  estimates  (Cd.  2337,  p.  292)  the  ad  valorem 
equivalent  of  the  ImportDuties  levelled  on  the  principal  manufac- 
tures exported  from  the  United  Kingdom  in  1903-4  as  follows  : — 


APPENDIX,  151 


Russia,  131  ;  United  States,  73 ;  France,  34 ;  Germany, 
25  ;  Canada,  17  ;  Belgium,  13  ;  New  Zealand,  9 ;  Japan,  9  ; 
Switzerland,  7  ;  Australia,  6 ;  South  Africa,  6  ;  Holland,  3  ; 
British  India,  3. 

Ji^oU  4. — Cotton. 

See  pp.  66,  93,  112-115.— Since  1893  the  consumption  of 
cotton  in  the  United  Kingdom  has  increased,  the  average  for 
1898-1902  being  15  million  cwts.,  while  that  for  1889-93  was  14*1 
million  cwts.  The  world's  consumption  of  cotton  has  tended 
to  outstrip  the  supply,  and  there  was  a  serious  shortage  in  1903-04 
when  the  supply  from  U.S.A.  fell  off.  Three-quarters  to  four- 
fifths  of  the  whole  supply  still  comes  from  U.S.A.,  but  efforts 
are  now  being  made  to  extend  the  cultivation  of  cotton  in  the 
British  Empire.  The  value  of  exported  cotton  manufactures 
(1893-1904)  showedno  important  changes  that  were  not  accounted 
for  by  changes  in  the  price  of  raw  cotton.  The  quantity  of 
piece  goods  has  increased,  but  not  so  rapidly  as  prior  to  1890  ; 
that  of  yarns  has  fallen  off. 

EXPORTS   OF   COTTON. 


Average  of  years. 

1883-1887 

Piece  goods. 
Million  yards. 

4620 

Yarns. 

Million  lbs. 

255 

1888-1892 

4970 

250 

1893-1897 

5000 

240 

1898-1902 

5160 

190 

It  is  supposed  that  the  piece-goods  are  of  increasing  intrinsic 
value,  so  that  the  increase  is  rather  greater  than  appears. 
Europe  is  taking  less  than  in  former  periods,  as  Germany  and 
other  countries  develop  their  home  manufactures  and  protect 
them  by  tariffs,  but  U.S.A.  is  taking  more.  [See  Cd.  1761,  pp. 
444,  445.]  No  foreign  country  has  as  yet  made  very  much 
impression  on  neutral  markets  ;  but  Germany,  Belgium, 
Switzerland,  and  U.S.A.  together  exported  in  1900  cotton  goods 
of  not  far  less  than  half  the  value  of  the  cotton  exports  from 
the  United  Kingdom.     India  exported  (average  of  1896-1900) 

L 


152  APPENDIX. 


£4,600,000  worth  of  twist  and  yarn,  and  £1,800,000  worth  of 
manufactures  (reckoning  £1  =  15  rupees). 

Note  5. — Wool. 

See  p.  116. — The  consumption  of  wool  in  the  United  Kingdom 
has  increased  very  rapidly  in  recent  years  ;  but  the  value  and 
quantity  of  exports  have  fallen  off,  while  production  for  the 
home  market  has  increased. 

EXPORTS   OF  WOOL. 
00,000  omitted. 

Average.  Manufactures.  Yarn.  Consumption  ofWool 

in  United  Kingdom. 

1883-1892.      £195     235  yds.  I  £52    542  lbs.        4181  lbs. 
1893-1902.        158     168   „     |     63    727   „  5145    „ 

^    It  seems  almost  certain  that  the  falling  off  in  number  of  yards 

I  is  partly  explained  by  the  greater  intrinsic  worth  of  each,  the 

I  average  weight  and  fineness  increasing.     The  quantity  exported 

to  U.S.A.  increased  very  much    in    1895,   during  the   Wilson 

Tariff,  but  has  been  at  a  low  level  since  the  Dingley  Tariff  of 

1897.    The  quantity  exported  to  Germany,  Holland,  and  Belgium 

together  remained  stationary  from   1890  to  1900,  but  fell  in 

1901-03  ;   that  to  France  has  fallen  rapidly.     Meanwhile  the 

importation  of  woollen  cloths  has  increased,  till  the  total  value 

of  woollen  yarns  and  manufactures  imported  into  the  United 

/  Kingdom  is  nearly  half  that  of  exports  of  similar  goods.     The 

woollen  and  worsted  trade  is  so  differentiated  in  the  various 

countries    and   towns  manufacturing  them,   that  this  double 

i  trade  is  less  remarkable  than  appears  at  first  sight.     The  exports 

of  competing  countries  to  neutral  markets  is  of  considerable 

extent ;  but  the  value  of  the  German  export  trade  was  the  same 

in  1890  and  1900,  while  that  of  France  fell  off. 

Note  6. — Iron  and  Steel. 

See  pp.  90,  108-111.  —  The  production  of  pig-iron  in  the 
twenty  years,  1882-1901,  has  been — 


APPENDIX.  153 


United  Kingdom 
United  States   ... 
Germany    

Average  for  Quinquennial  Periods. 

1882-86        1887-91        1892-96     1897-1901 

Tons.               Tons.               Tons.                   Tons. 

7,900,000    7,800,000    7,500,000      8,700,000 
4,600,000    7,600,000    8,200,000    12,800,000 
3,500,000    4,400,000    5,400,000      7,700,000 
1,800,000    1,800,000    2,100,000      2,500,000 

France   

The  total  consumption  of  pig-iron,  domestic  and  foreign,  has 
been  in  the  same  periods — 


1882-86 

1887-91 

1892-96 

1897-1901 

Tons. 

Tons. 

Tons. 

Tons. 

United  Kingdom. 

6,600,000 

6,800,000 

6,700,000 

7,700,000 

United  States   ... 

4,900,000 

7,700,000 

8,200,000 

12,800,000 

Germany   

3,600,000 

4,600,000 

5,500,000 

8,300,000 

France   

2,000,000 

1,800,000 

2,000,000 

2,700,000 

The  United  Kingdom  is  thus  falling  to  the  third  place  in  this 
respect.  The  manufacture  of  machinery  and  many  other  pro- 
ducts depending  on  iron  and  steel  has,  however,  increased 
rapidly  at  home,  and  an  increasing  export  trade  has  been  done 
in  machinery. 

EXPORTS   OF  certain   IRON  AND   STEEL  PRODUCTS   FROM   THE 

united  kingdom. 

Quinquennial  Averages. 

1885-89  1890-94  1895-99  1900-04 

Cutlery,  hardware,  imple- 
ments, and  tools £3-9      3*5  3*4      3*9  millions 

Machinery     14  14  15  19  „ 

Miscellaneous  iron  and  steel 

products    21  20  18  23-6  „ 

IngotSjbars  and  sheets  of  steel      1*6  1*8  2*6      2*9  „ 

Pig  and  puddled  iron       2*5  2*3  3*0      3*6  „ 

£43      42        42        52 


154  APPENDIX. 


Note  7.— Coal. 

See  pp.  108-111. — The  exportation  of  coal  has  continued  to 
increase  rapidly. 


QUANTITY  OF  COAL  EXPORTED. 

For  use  of  steamers 
Average  of  years,      To  Foreign  Countries.  in  foreign  trade. 

1880-84  20,100,000  tons  5,750,000  tons 

1890-94  29,400,000    „  8,550,000    „ 

1900-04  44,100,000    ,,  14,900,000    ,, 


/  The  coal  in  the  last  column  is  not  included  in  general  state- 
ments of  exports,  but  forms  part  of  the  expenses  which,  as  cost 
of  shipping  and  freights,  go  to  pay  for  the  excess  of  our  imports  ; 
in  addition,  a  part  of  the  other  column  is  accountable  for  by  the 
needs  of  our  ships  abroad.  The  coal  export  trade,  because  of 
its  bulk,  is  very  important  in  providing  cargoes  for  the  out- 
journey  for  ships  which  bring  home  our  imports.  The  value 
of  coal  exported  was  10  per  cent,  of  the  total  value  of  exports 
of  home  products  in  1901-04.  Though  the  output  from  the 
coalfields  of  Great  Britain  has  increased  steadily,  it  has  been 
passed  both  by  Germany  and  the  United  States.  The  South 
Wales  coal  has  been  in  rapidly  increasing  demand  abroad,  and 
the  question  is  often  raised  whether  it  is  advisable  to  allow  its 
export  unchecked.     An  export  duty  of  Is.  per  ton  has  been  in 

/  force  on  all  coal  since  1901.  It  has  recently  been  alleged  that 
the  great  importance  of  coal  in  our  foreign  trade  was  a  sign  of 
our  weakness,  and  that  we  are  exporting  raw  material  and 
capital  that  cannot  be  replaced  ;  in  answer,  it  may  be  said  that 
the  great  part  of  the  cost  of  coal  is  due  to  labour,  and  that  its 
export  does  not  difi'er  essentially  in  this  respect  from  that  of 
manufactured  goods  ;  and  that  the  Royal  Commission  on  Coal, 
which  reported  in  January,  1905,  gave  reassuring  accounts  of 
the  amount  of  coal  still  in  the  mines,  so  that  the  efi'ects  suggested 
on  pages  108,  109  will  be  more  remote  than  has  been  supposed. 
[See  Mr.  D.  A.  Thomas's  paper,  Stat.  Journal,  1903,  for  a  masterly 
discussion  of  the  whole  subject.] 


APPENDIX.  15s 


"Note  8. — Silver. 


See  pp.  96-102. — The  following  table  gives  the  price  of  silver 
and  the  exchange  value  of  the  rupee  : — 


1890   1891  1892  1893  1894  1895   1896 

jUverperoz.:     48d.     45d.  40d.  36d.  29d.  30d.     31d. 

''Tcoun^cirbiflsr*'!  16id.  18d.  17d.  15d.  14id.  13d.     14d. 

1897   1898  1899  1900  1901  1902 

-Silver  per  oz. :     28d.     27d.  27d.  28d.  27d.  24d. 

^Tco-^iS'^S^sT'l   14id.  15d.  16d.  16d.  16d.  16d. 


The  price  of  silver,  measured  in  gold,  has  thus  continued  to 
fall  rapidly,  but  the  value  of  the  rupee  has  been  kept  up.  The 
Indian  regulations  described  on  page  100  appear  to  have  met 
with  complete  success  ;  the  rupee  fell  a  little  after  the  closing 
of  the  mints  to  silver,  but  as  the  demand  for  it  increased,  it 
returned  to  16d.,  and  in  1899  the  scheme  was  completed,  and 
gold  was  declared  legal  tender  in  India  ;  since  then  silver  in 
India  is  token  money,  15  rupees  representing  a  sovereign, 
though  the  silver  contained  in  them  is  only  worth  about 
12s.  6d.  According  to  Mr.  Robertson's  paper,  "  The  Currency 
Policy  of  India "  {Journal  of  the  Society  of  Arts,  March,  1903), 
the  measures  have  met  with  great  success.  India's  trade  with 
gold-using  countries  (estimated  at  three-fourths  of  the  whole)  is 
now  on  a  stable  basis.  Many  other  countries  have  adopted  a 
gold  standard,  Costa  Rica  in  1896,  and  Russia  and  Japan  in  1897  ; 
the  Straits  Settlements  and  Peru  have  taken  steps  in  the  same 
direction.  In  the  United  States  the  purchase  of  silver  arranged 
under  the  Sherman  Act  of  1890  was  discontinued  in  1893,  and 
their  currency  system  appears  now  to  be  firmly  established,  on  a 
gold  basis. 

Note  9. — Re-exports, 

See  Diagrams  ix.  and  x.,  p.  135. — The  numbers  indicated  in 
Diagram  x.  are  those  for  Imports,  whether  for  home  consumption 
or  re-export.     Exports  of  Foreign  and  Colonial  Produce  (termed 


156  APPENDIX. 


"  re-exports  ")  are  valued  at  from  £56  to  £70  millions,  or  about 
one-seventh  of  total  Imports  annually  in  the  period  1889-1903> 
the  same  fraction  as  in  1855-59. 


Quinquennial  Averages. 


Exports  of  Home 

Imports. 

Re-exports. 

Produce, 

1855-9 

169,000,000 

23,000,000 

116,000,000 

1860-4 

235,000,000 

42,000.000 

138,000,000 

1865-9 

286,000,000 

49,000,00 

181,000,000 

1870-4 

346,000,000 

55,000,000 

235,000,000 

1875-9 

375,000,000 

55,000,000 

202,000,000 

1880-4 

408,000,000 

64,000,000 

234,000,000 

1885-9 

379,000,000 

61,000,000 

226,000,000 

1890-4 

419,000,000 

62,000,000 

234,000,000 

1895-9 

453,000,000 

60,000,000 

238,000,000 

1900-4 

533,000,000 

67,000,000 

281,000,000 

The  re-exports  only  give  employment  to  shipping  and  trans- 
port agents.  Raw  cotton  and  wool  accounted  in  1895-99  for  a 
yearly  average  of  some  £17,000,000 ;  and  these  numbers  have 
been  subtracted  in  line  C,  Diagram  ix.,  to  give  a  correct  view 
of  the  amount  imported  for  home  use.  Other  goods,  which  reach 
us  in  a  partly  manufactured  state,  are  exported  when  finished, 
so  that  in  reality  our  exports  of  "  home  produce  "  contain  a 
considerable  foreign  element.  Considerable  sums  should  there- 
fore be  subtracted  both  from  our  imports  and  exports  {viz. : 
the  value  of  all  imported  raw  materials  and  partly  manufactured 
goods,  which  are  manufactured  and  ultimately  re-exported), 
before  a  correct  view  can  be  obtained  of  the  importance  of 
foreign  trade  to  us.  The  materials  for  such  a  calculation  do  not 
exist. 

NoU  10. — Sources  op  Imports. 

See  Diagram  x.,  p.  135. — The  countries  credited  in  the  returns 
as  supplying  our  imports  are  in  many  cases  the  countries  of 
consignment,  not  of  origin.  Goods  from  Germany  often  come 
to  us  from  Dutch  or  Belgian  ports,  and  have  been  credited  to 


APPENDIX,  157 


those  countries.  Swiss  and  some  Italian  goods  are  credited  to 
France  or  Belgium  ;  Austrian  to  Germany,  Canadian  to  U.S.A., 
and  vice  %e,rsa.  The  most  important  case  is  that  of  Germany, 
and  a  more  correct  view  can  be  obtained  by  grouping  together 
Germany,  Holland,  and  Belgium  ;  or  (for  more  general  purposes) 
Germany,  Russia,  Austria,  Holland,  Belgium,  Italy,  Switzerland, 
and  France.  The  trade  accounts  are,  since  1st  January,  1904, 
kept  on  both  systems,  showing  country  of  consignment  and  that 
of  origin.  The  differences  between  the  two  for  the  first  half  of 
1904  are  given  in  the  Board  of  Trade  memorandum,  Cd.  2337, 
pp.  350-375. 


FINIS. 


INDEX. 


{No  index  other  than  page  viii.  is  given  to  diagrams.) 


Africa,  S.,  balance  of  trade  with,  74  ;  tariff  of,  151 
Agriculture,  number  of  labourers  engaged  in,  in  1760  and  1881,36; 

effect  of  improved,  123  ;  imports  and,  133-141 ;  history  of 

English,  138  et  sq.  ;  future  of,  140 
America,  vide  suh  United  States  ;  Canada  ;  and  South  America 
Arkwright,  his  inventions,  26,  33 
Australia,  emigration  to,  59 ;  gold  discoveries  in,  59 ;  balance 

of  trade  with,  74  ;  borrowings  of,  78  ;   exports  to,  121 ; 

tariff  of,  151 
Austria,  tariff  of,  62  ;  treaty  with,  63  ;  depression  in,  82,  84 


Baltic,  trade  with,  26 

Belgium,  Free  Trade  in,  46,  61 ;  railways  in,  58  ;  treaty  with,  63 ; 

balance  of  trade  with,  74  ;  exports  of  wool  to,  152  ;  present 

tariff  of,  151,  157 
Berlin  decree,  26,  27 
Bi-metallism,  101 

Bombay,  cotton-spinning  in,  44  (footnote) 
Brassey,  Mr.,  railways  in  France,  58  ;  tenders  for  goods,  90 
Bright,  John,  49 

Bristol,^importance  of,  6  ;  population  of,  35 

iS8 


INDEX,  159 


Builders,  number  of,  36 
Butter,  prices  of,  52 


California,  gold  in,  59 

Canada,  balance  of  trade  with,  74 ;  grain  from,  91 ;  exports 

to,  119  ;  present  tariff  of,  151,  157 
Canals,  91,  92 

Cartwright,  his  inventions,  26,  33 
Central  America,  exports  to,  121 
China,  balance  of  trade  with,  74  ;  exports  to,  121 
Cleveland,  election  of  President,  68,  69 
Coal,  in  India,  72,  118 ;  trade,  108  ai  sq, ;  in  manufacture,  112, 

118  ;  exportation  of,  154  ;  export  duty  on,  154 
Cobden,    mention    of,  49  ;    on    the    Continent,    91 ;    French 

Treaty,  150 
Coffee,  prices  of,  52,  53 
Colonies,  how  regarded  in  1790,  8  ;  trade  with,  31,  121,  122 ; 

shipping  of,  119 
Colonial  Preference,  149,  150 
Commission  on  Depression,  85 
Competition,  increase  of,  84,  86  ;  foreign,  120-123 
Continent,  labour  on  the,  131 
Corn,  vide  Wheat 

Corn  Laws,  struggle  against,  35,  49,  50  ;  repeal  of,  51 ;  of  1815,  48 
Costa  Rica  and  gold  standard,  155 
Cotton,  in  India,  44  (footnote),  66,  72,  100,  113-116 ;  prices  of, 

52,  53  ;  American  War  and,  64-67 ;  freights  for,  93 ;  position 

in  1893,  112-116,  151 
Crimean  War,  28 

Crises,  of  1873,  80  sq. ;  1883,  85,  86  ;  modern  features  of,  145 
Crompton's  inventions,  33 
Customs,  vide  Tariffs 


Dairy  produce  in  England,  136 
*'  Democrats,"  policy  of,  67,  68 
Denmark,  tariff  of,  62  ;  exports  to,  121 
Depressions,  effect  of,  102  sq. ;  and  mde  Crises 


i6o  INDEX. 

Derby's  Government,  45 
Diminishing  Return,  136,  137,  140 
Division  of  Labour,  11-17,  146 
Duties,  mde,  Tariffs 

B 

East  India  Company,  9, 10,  51,  71 

Egypt,  Cotton  in,  66 

England  in  eighteenth  century,  4 

Exchange,  mde  Rupee 

Exportation,  of  machinery,  57  ;  of  cotton,  115,  116 

Exports,  in  1791  and  1891,  5  ;  in  1805-1815,  26  ;  growth  of,  39; 
to  Europe  in  1860  and  1870,  63  ;  in  1870-1895,  103  ;  to 
India,  71 ;  to  various  countries,  73,  74 ;  and  pp.  120  scj'. ; 
"invisible,"  119 

Europe,  trade  with,  121 


Farmers,  vide  Agriculture 

Flax,  in  Ireland,  117 

Food,  Imports  of,  133,  135 

France,  trade  with,  30,  63,  73,  74,  157  ;   Free  Trade  in,  45  ; 

treaty  with,  62  ;  exports  to,  121,  152  ;  railways  in,  58  ;  and 
•   iron  trade,  153  ;  present  tariff,  151 
France,  war  with  (Napoleonic),  effects  of,  9,  25  sg;. ;  history  of, 

23,24 
Franco -Prussian  War  and  depressions,  83,  84 
Freights,  91  sq^. 
Free  Trade,  history  of,  40,  44  sg. ;   and  Imperial  Federation, 

123 ;  principles  of,   41  sg. ;   effects  of,  55,  56 ;    reaction 

against,  84,  148 

G 

Germany,  and  Free  Trade,  45  ;  railways  in,  59,  81 ;  treaty  with, 
63 ;  trade  with,  63,  73, 121, 125, 157 ;  loans  to,  78 ;  depression 
in,  82  ;  manufactures  in,  84  ;  exports  of  wool  to,  152 ;  and 
iron,  153  ;  and  coal,  154  ;  present  tariff,  151 

Gladstone's  reforms,  51 


INDEX.  i6i 


Glasgow,  importance  of,  6 
Glasgow  Bank,  failure  of,  67 

Gold  discoveries,  4,  59,  124  ;  standard  in  various  countries,  101, 
155,  157 


Grain,  vide  Wheat 
Greeks,  loans  to,  78 


Harvests,  bad,  in  war,  24 

Holland,  Free  Trade  in,  46,  62  ;  balance  of  trade  with,  74  ; 

exports  to,  121,  152,  157  ;  tariif  of,  151 
Hong-Kong,  silver  in,  101 
Hume's  Committee,  49,  50 
Huskisson's  reforms,  48,  52 


Iceland,  exports  to,  121 

Imperial  Federation,  123,  149 

Imports,  in  1791  and  1891,  5  ;  growth  of,  39  ;  to  Europe  in  1860 

and  1870,  63 ;    to  various  countries,  73,  74 ;    imports  and 

exports  in  1870-1895,  103  ;  average  amount  spent  on,  107  ; 

tabulated,  133-136  ;  sources  of,  156 
Income,  average  in  different  years,   104;   changes  in  incomes, 

1775-1890,  106  ;  effect  of  imports  on,  142  ;  wcie  Wages 
Indemnity,  Franco-Prussian  War,  41,  45,  83 
Index  number,  explained,  17  sg. ;  used,  52,  103,  107 
India,  mcZe  Cotton  and  Rupee  ;  imports  from,  66  ;  trade  of,  71, 

72 ;   trade  with,  75  ;   railways  in,  88,  89  ;   grain  from,  92  ; 

exports  of  cotton  to,  116  ;  revenue  in,  98  ;  tariff  of,  151 
Indies,  East  and  West,  trade  with,  9 ;  West  differential  duties, 

48,  51 
Industrial  revolution,  32-38,  144 
Interest  on  foreign  loans,  75-79,  133 
Inventions,  effect  of,  1,  2,  4,  32 
Ireland  in  1784,  10 

Iron  and  steel,  exported,  58  ;  trade,  84,  87,  108,  112,  152,  153 
Italy,  treaty  with,  63  :  exports  to,  121,  157 


1 62  INDEX. 


Japan,  exports  to,  115,  121 ;  present  tariff  of,  151 ;  and  gold 
standard,  155 


Jute  trade,  72,  116 


Landlords,  -uic^  Agriculture 

League,  Anti-Corn  Law,  50 

Linen  exported,  116 

London,  position  of,  in  eighteenth  century,  6 

M 

Machinery,  effects  of,  5  ;  exported,  57,  134 

Manchester  Cotton  Spinning  Inquiry,  100,  114 

Manufactures,  original  meaning,  33  ;  number  engaged  in,  in 
1760  and  1881,  36  ;  in  England  and  India,  99,  114  ;  foreign 
demand  for,  57  ;  in  foreign  countries,  113,  125 

Middleman,  displacement  of,  61,  95 

Migration  of  labour,  6,  15,  36,  37,  53,  138,  141 

Milan  decree,  26,  27 

Minerals,  and  mines,  108-111 ;  amount  exported,  135,  136 

Miscellaneous  exports,  increase  of,  117,  126 

McKinley  Tariff,  68,  70 

"  Most  favoured  nation  "  clause,  63 

N 

"  National  Policy,"  a,  149 

Navigation  Laws,  30 

Neutral  markets,  124,  127 

Newmarch  on  the  fiscal  system  of  1820,  48 

New  South  Wales  and  Free  Trade,  46 

New  Zealand,  borrowings  of,  78  ;  present  tariff  of,  151 

North  America,  vide  Canada 

Norway,  shipping  of,  119  ;  exports  to,  121 

Norwich,  population  of,  in  1760,  35 


INDEX.  163 


Orders  in  Council,  25 
Over-production,  127 


Peel's  Reforms,  49,  50 

Petition  of  merchants,  the,  28,  40,  47 

Population,  at  various  dates,  5,  34,  60 ;  distribution  of,  35-37 

Portugal,  Free  Trade  in,  62  ;  exports  to,  121 

Prices,  in  1793-1804,  24  ;  in  1820-1835,  52 ;  in  1840,  1850,  and 
1885,  52,  53  ;  of  cotton  in  1864,  65  ;  of  wheat,  28,  50,  53, 
92  ;  of  silver,  98  ;  prices  and  wages,  99  ;  fall  of  prices  since 
1870,  84  ;  mde  Index  number 

Profits,  diminution  of,  132 

Protectionists,  50,  150 

R 

Railways,  extension  of,  40,  59  ;  investments  in,  81 ;  in  England, 
58,  86  ;  in  other  countries,  58,  87  ;  efiects  of,  88  s^. 

Raw  materials,  production  of,  3,  4  ;  importation  of,  34,  37,  133, 
134  ;  depression  in  countries  producing,  82 

Re-exports,  155, 156 

Rent,  %ide  Agriculture 

*'  Republicans  "  and  the  tariffs,  45,  69 

Roads,  condition  of,  in  1790,  6 

Rupee,  exchange  value  of,  96,  99,  155 ;  effects  of,  96,  100,  101 ; 
and  cotton,  114,  115 

Russia,  trade  with,  26,  74,  121,  157  ;  tariff  of,  62,  151 ;  treaty 
with,  63  ;  loans  to,  78  ;  depressions  in,  82,  84  ;  grain  from, 
91 ;  exports  to,  121 ;  and  gold  standard,  155 


Sardinia,  Free  Trade  in,  62 

Shipping,  English,  in  1811,  27  ;  earnings  of,  74,  75, 133  ;  English, 

1870-1890,  105  ;  "  invisible  exports,"  119 
Silk,  prices  of,  52,  53  ;  imported,  136 
Silver,  96-102,  155 
Smith,  Adam,  44 


1 64  INDEX. 


South  America,  trade  with,  74 ;  depression  in,  82,  83  ;  exports 

to,  121 
Spain,  tariff  of,  62  ;  exports  to,  121 
Spinning- jenny,  the,  1,  33 
Steam,  33,  35 
Steamers,  introduction  of,  40,  55  ;    and  Suez  Canal,  91 ;    mdie 

Shipping 
Steel,  vicZe  iron 

Straits  Settlements  and  gold  standard,  155 
Suez  Canal,  effect  of,  60  ;  and  steamers,  91 
Sugar,  price  of,  51-53 ;  imported,  135 
Sweden,  tariff  of,  62  ;  treaty  with,  63  ;  exports  to,  121 
Switzerland,  Free  Trade  in,  62 ;  wages  in,  130 ;  present  tariff 

of,  151 ;  157 


Tariffs,  Foreign,  changes  in,  150 

Tariff,  Mr.  Huskisson's,  48 ;  Peel's,  49,  50,  51 ;  Gladstone's,  51 ; 

effects  of  reduction  of,  51,  52  ;  effects  of  increase  of,  124  ; 

im£e  s\{b  the  various  countries. 
Tea,  prices  of,  52,  53 

Telegraph,  effect  of,  40,  60,  95,  96  ;  invention  of,  55 
Textile  manufactures,  amount   exported,    134,    135  ;    mde  sub 

Cotton,  Wool,  etc. 
Textile  trades,  present  position  of,  121  sq.  ;   final  review  of,  117 
Timber,  amount  imported,  135 
Towns,  population  of,  in  1760  and  1901,  35,  36 
Transport,  in  eighteenth  century,  6  ;  trade,  112  ;  vide  Shipping 

and  Freights 
Treaties,  commercial,  62,  64 
Turks,  loans  to,  78 

U 
United  States,  trade  with,  10,  31,  74,   125,  157  ;  war  with 
(1812),  24  ;  its  effects,  26 ;  Civil  War  (1861)  41,  45,  64  sq. 
its  effects,  65  sq.,  T2,  120 ;  tariffs  of,  45,  67-71,  124,  150, 
151,  152 ;   shipping  of,  91,  119 ;   depressions  in,  82,  83 
railways  in,  87,  89  ;  exports  to,  87,  121,  122 ;  and  iron 
trade,   153 ;    and    coal,   154 ;    and    gold    standard,    155 
Sherman  Act,  155  ;  vide  Cotton  and  Wool 


INDEX.  165 


V 

Values,  vide,  Index  number  and  Prices 
Villiers  and  the  Corn  Laws,  49 

W 

Wages,  in  1804,  25  ;  in  1780-1800,  34 ;  1860-1870,  64 ;  at 
various  dates,  21,  99,  105 ;  in  India,  100,  115  ;  high  wages 
and  efficiency,  129, 130  ;  and  competition,  131 ;  agricultural, 
139 ;  mde  Incomes 

Walker's  (Secretary),  tariff,  68 

Wars,  rifZe  Crimean,  France,  Franco-Prussian,  United  States 

Water-power,  33 

West  Indies,  md^  Indies 

Wheat,  prices  during  Napoleonic  War,  28  ;  prices  in  1840,  1850, 
and  1885,  52,  53  ;  prices  in  1831-1900,  92 ;  amount 
imported,  92,  102,  135  ;  xide  Agriculture  and  Corn  Laws 

Wool,  trade,  7,  116,  152  ;  prices  of,  52,  53 ;  consumption  of, 
152 

Working-classes,  the,  and  foreign  trade,  143 

Worsted-trade,  the,  152 


Yarn,  -yicZe  Cotton  and  Wool 
Young,  Arthur,  36 

Z 

ZoLLVEREiN,  tariff  of,  62,  63,  150 


Printed  iy  Cowan  &^  Co.,  Limited,  Perth. 


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